The CEO of Real estate mega-portal Redfin announced in early November that it was tightening its focus and laying off 13% of its workforce – including closing their home-flipping business, RedfinNOW. The announcement was made through a company-wide email entitled “All-Hands Email on November Layoff” sent out by CEO Glenn Kelman.
RedfinNOW offered potential homesellers a “hassle-free way” to sell their homes. They were given an all-cash offer within days that that promised “no repairs, staging, or open houses so you can stick to your work and life schedules.” Apparently the promotion became a too much of a financial burden as Redfin took possession of “hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now,” according to Kelman’s email. Indeed…
“We’re laying off 862 brilliant, loyal people and also closing RedfinNow. We’ll still need home-services employees for our concierge service to fix up brokerage customers’ listings, but since that group spent most of its time renovating RedfinNow homes, it will get much smaller.”
“…iBuying is a staggering amount of money and risk for a now-uncertain benefit. We’ve tied up hundreds of millions of dollars in houses that you yourself wouldn’t want to own right now. Even before its overhead expenses, the RedfinNow properties segment will likely lose $22 – $26 million dollars in 2022. However small our iBuying loss may be compared to others, that loss is still larger than we could afford to bear again.”