In alerting workers to the layoff, Kelman made dire predictions related to the housing market through next year: “A layoff is awful, but we can’t avoid it,” he wrote. “We plan to keep increasing our share of the market, but that market in 2023 is likely to be 30% smaller than it was in 2021. The June layoff was a response to our expectations that we’d sell fewer homes in 2022. This layoff assumes the downturn will last at least through 2023.”
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Kelman ended by thanking affected worker while alerting them to post-layoff benefits: “To every departing employee who put your faith in Redfin, thank you,” Kelman wrote. “I’m sorry that we don’t have enough sales to keep paying you. The severance pay is the same as before: 10 to 15 weeks of pay, depending on Redfin tenure, and healthcare coverage for three months.”
The CEO explained the reason for the layoffs, predicated on the fact that 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 in 2022. However small our buying iBuying loss may be compared to others, the loss is still larger than we could afford to bear again.”
For now, Kelman added, less is more: “All of us, myself included, have to grieve for RedfinNow and other projects now ending. We’ll be ridiculed for thinking they could’ve succeeded. But having strained ourselves to the limit for a long time, we have to acknowledge that, even if we had the money to do more, we’ll be happier and more successful doing less, and doing it well. It will be good to focus on our original calling: getting people a higher, not a lower, price for their homes at a 1% fee, and supporting people through their entire move – from the mobile application to the agent to the leader to the title specialist.”