- Redfin CEO Glenn Kelman said in a blog post that the brokerage is furloughing 41% of its agents.
- In a regulatory filing, the company also said that it would be laying off 7% of its staff.
- The coronavirus has slowed the US housing market, prompting layoffs at other brokerages like SoftBank-backed Compass.
- Corporate employees were spared the bulk of the layoffs and furloughs, but will take a 10-15% pay cut.
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A sudden slowdown in residential real estate due to the coronavirus has prompted more furloughs and job cuts.
Redfin Chief Executive Glenn Kelman said in a blog post on Tuesday that the residential-brokerage company is furloughing 41% of its agents and their support staff until September 1.
In an SEC filing, the company also said that it would be laying off 7% of its staff.
The company is laying off new hires who haven’t completed training or worked with any customers, according to the blog post. Most corporate employees at the brokerage’s Seattle headquarters aren’t being laid off, but they are taking a 10-15% pay cut. As of December 31, 2019, Redfin had 3,377 employees.
The coronavirus has caused a major slowdown in the once-healthy US housing market. The real-estate brokerage industry is hit doubly hard by the nature of the pandemic, which has caused a drop in demand and also requires social distancing that makes it much harder to show, negotiate, buy and sell homes.
Furloughed employees were offered a “transition bonus” and health care benefits through the summer. According to the filing, the total cost of termination bonuses and severance payments ranges from $2.9 million to $3.3 million.
“To those who have been asked to leave Redfin today, thank you,” Kelman wrote.”I can’t imagine the grief we’ve caused you. I’m sorry we let you down. We’ll fight like wild animals to bring everyone on furlough back.”
Kelman cited the federal stimulus’s $600 weekly increase in unemployment insurance as one of the deciding factors behind the company’s choice to furlough employees. The company estimates that 75% of employees who are furloughed will earn more from unemployment insurance than they did working for Redfin.
At the end of last month, Kelman elected to forgo his base salary for 2020. Executive officers are electing to not receive bonus payments.
Redfin is not the only residential brokerage to lay off employees: SoftBank-backed Compass laid off 15% of its staff last month. An email to staff seen by Business Insider also noted that Compass had also reduced its Concierge program, which provided 0% interest loans to sellers to make improvements to their home, by 80%, paused corporate marketing, and halted non-essential projects.
Redfin also paused its iBuying program last month, joining Zillow and SoftBank-backed Opendoor in halting new home-flipping activity.
iBuyers use technology to quickly evaluate a home’s value and purchase the home with all-cash offers, rapidly renovate and repair it, and then sell it at a profit. But it’s a low-margin business and profitability is closely tied to market conditions and the ability to cut operational costs.
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