Redfin will cut 7% of its staff and furlough hundreds of agents due to decreased housing demand amid the COVID-19 crisis.
The Seattle real estate giant will slash 41% of its field agent workforce, with a majority furloughed until Sept. 1, and the remaining laid off, Redfin CEO Glenn Kelman announced Tuesday.
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The company is also making small cuts at its headquarters in Seattle, while temporarily slashing all salaries by 10-to-15% and canceling bonuses for the remainder of this year. It previously halted bonuses for just the first half of 2020.
Redfin had 3,377 total employees as of Dec. 31, and employed more than 1,500 lead agents.
Kelman said the company opted for a large-scale furlough in part because most agents will be able to earn more from unemployment insurance than from Redfin.
“We still have had to furlough people today because of a downturn, but it wasn’t because we didn’t try to trade growth for job security,” he wrote. “Every year, we’ve hired about 25% fewer agents than could be supported by the demand from Redfin.com, so that even if demand fell 25%, our workforce would still be at 100% productivity. Now housing demand is down much more than that.”
The company expects to incur a pre-tax charge of $2.9 million to $3.3 million related to termination benefits.
Redfin said it is still committed to temporarily increasing the fixed portion of agent pay, as it announced last month, given that compensation is taking a hit due to reduced home-buying and selling activity.
Kelman also said last month that he will not take salary for the rest of 2020.
In his blog post today, Kelman said Redfin’s long-term outlook is strong in part due to its technology such as video tours and 3D scans that he predicts will be used more after this crisis.
“The pandemic will end,” he wrote. “Redfin, and our whole-hearted but still imperfect efforts to care for our employees, will endure. To those who have been asked to leave Redfin today, thank you. 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.”
More homeowners are taking properties off the market; new listings are down; pending home sales are down; and in-person home tours are slowing due to the COVID-19 crisis, Redfin reported last week.
Redfin’s revenue grew 88 percent year-over-year to $233 million in Q4, while net loss per share was $0.08, down from -$0.14 in the year-ago quarter. The company is active in more than 90 markets across the U.S. and Canada.
Redfin rival Zillow Group outlined its own coronavirus playbook last month, noting that it will slash expenses by 25% this year, freeze hiring across the company, cut nearly all marketing spend, and suspend home-buying through its Zillow Offers business. Redfin has also paused its own home-buying business, RedfinNow.