Glenn Kelman: Redfin should have shuttered “risky” iBuying earlier
“It shouldn’t have taken a housing market correction”
Glenn Kelman has at least one regret from a tumultuous 2022: keeping his company’s iBuyer going as long as he did.
As the housing market cooled through 2022 from a frenzied 2021, RedfinNow shut down in November alongside a round of layoffs at the residential brokerage. The Redfin chief executive told the Associated Press that he should’ve closed down the company’s iBuying business sooner.
“I probably should have closed the iBuying business earlier,” Kelman said. “It shouldn’t have taken a housing market correction to realize how capital-intensive and risky that was.”
When the iBuying business shut down, the company cited rising rates, claiming maintaining a profit would involve making “insultingly low” offers on homes. The dismantling of RedfinNow was directly tied to 264 cuts at the brokerage, which Kelman told the outlet has a workforce that’s 30 percent smaller after waves of layoffs last year.
After stocks hit an all-time low in November and the company lost roughly 90 percent of its value since a peak in early 2021, Kelman said he hopes the brokerage “made the changes that we need to make to adapt to this environment.”
“The commitment we’ve made is that we’re going to generate adjusted EBITDA in 2023,” Keman told the outlet. “That’s important because that means that we’ll be generating cash to serve our debt.”
The company reported $90.2 million in losses in the third quarter, up from $78 million it lost in the previous quarter. The company was down to $360 million in cash at the end of September, below the $590 million it started the year with.
Chief financial officer Chris Nielsen said in the company’s third-quarter earnings call it expects to bank $100 million by the second quarter of 2023 by selling off RedfinNow inventory.
Redfin’s exit from the business placed it alongside Zillow, which shuttered iBuying one year earlier. The shift in the housing market throughout 2022 ramped up scrutiny over other players like Offerpad and Opendoor, the company that pioneered the model and said in November it lost $928 million in the third quarter.
Anywhere, the parent firm of Corcoran, Coldwell Banker, Century 21, and Sotheby’s International Realty, announced earlier this month it was joining the quitting game and ending its iBuying business, RealSure.
— Holden Walter-Warner