The U.S. real estate brokerage and marketplace operator Redfin has announced that it will shutter its iBuying business and lay off more than 800 employees after its net losses exceed $90m in Q3.
The company, which directly employs over 2,000 agents across the country, generated $600m in revenue for Q3 (an 11% increase YoY) but in a struggling U.S. real estate market saw losses widen to $90m from a loss of $18m in 2021.
There were significant dips in other key metrics for Redfin in Q3 compared to the same period in 2021:
The Nasdaq-listed firm's iBuying division RedfinNow also saw the average revenue per home sold drop by almost $50,000 as prices continued to stagnate on the back of macroeconomic pressure. Like Zillow before it, Redfin has now decided to close its iBuying business with a spokesperson saying:
“We’re closing our iBuying business, RedfinNow, because maintaining a profit with rising interest rates would make our offers on homes insultingly low.”
RedfinNow was launched in 2020 as a way for the company to offer its customers a truly in-house end-to-end product. The volume of homes transacted through the service ramped up to a high of 617 in Q1 and stood at 530 in Q3.
The outlook for Redfin and other brokerages in the market looks quite bleak with CEO Glenn Kelman telling investors on a call that the only growth the company can possibly achieve is by taking market share from competitors. The company predicts a Q4 loss of between $118m-$134m, with CFO Chris Nielsen saying:
“We have to assume that it will be night always, and to make money in that market,”
Seattle-based Redfin is a brokerage that also functions as a popular de-facto portal thanks to the unique ability of U.S. brokerage sites to feature all available listings on the MLS. Redfin competes with Zillow for home hunter traffic and in several other categories including loan origination.