Redfin shutters iBuying business, cuts 13% of staff
Brokerage cited cooling market for second wave of cuts in 5 months
Redfin is shutting down its iBuying operation and laying off employees as the discount brokerage contends with a slowing market.
The layoffs are the company’s second wave of cuts in five months. SEC filings showing 862 employees were affected in the latest round, or 13 percent of the company’s total employees.
“We’re closing our iBuying business, RedfinNow, because maintaining a profit with rising interest rates would make our offers on homes insultingly low,” a spokesperson for the company said.
Two hundred and sixty-four of the cuts are related to the demise of RedfinNow. A spokesperson said about 20 percent of other employees in an eliminated role, about 20 percent are being offered other roles.
“To prosper in a housing downturn that could last at least through 2023, we have to simplify our business,” the spokesperson said.
Laid-off employees will receive several months of severance pay and health insurance.
The announcement comes days after Oppenheimer analyst Jason Helfstein downgraded Redfin’s stock, citing doubts about its business model. The company’s stock later plummeted to an all-time low.
News of the layoffs come on the eve of Redfin’s third-quarter earnings call. In the second quarter, the company recorded a net loss of $78 million.
Redfin is in good company among iBuyers with tanking profits. Zillow was the first major exit from the home-flipping business, announcing last November it was contending with a backlog of homes forced to sell at a major loss.
Rising mortgage rates have chilled what was, just months ago, a bustling housing market. Mortgage rates last month hit a 21-year high when they surpassed 7 percent, sending application activity to its slowest pace since 1997.
— Sasha Jones