Seattle-based online real-estate firm Redfin lays off 20 percent of its staff. CEO Glenn Kelman blames the layoffs on the credit crisis and says the next six months will be tough.
In the nearly three years since it debuted as the nation’s first online real-estate brokerage, Seattle-based Redfin has expanded to five other major cities.
Monday brought a reversal of fortune as the startup with the new business model announced a 20 percent staff cut nationwide, effective immediately.
Blame it on the economy and lagging home sales, said Redfin CEO Glenn Kelman.
“This is a good company. It’s got millions of dollars in revenue. We don’t think the next six months will be good, but we want to live to see another day,” Kelman said.
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In an industry where most real-estate agents work on commission only, Redfin is an anomaly. Agents are on staff and on salary; commissions are shared with buyers and sellers.
So losing about 20 percent of its staff, or 20 people, cuts deep into its agent pool.
It’s not the only one contracting. The number of licensed real-estate agents statewide has dropped from 32,516 last December to 30,362 in September, according to the Washington State Department of Licensing.
Kelman said Redfin saw almost 50 percent revenue growth even as home sales soured over the past year.
Then “in the past three or four weeks, we saw a different pattern emerge,” he said. “Banks stopped lending money. The stock-market crash caused down payments to disappear” when buyers could no longer tap stocks as a source of cash.
Sales stopped and transactions in the works fell through, he added.
Funded as a startup with venture capital, Kelman said the privately held company has “millions” left, so the cuts aren’t “because we ran out of money. But we sure don’t want to run out of money.”
Elizabeth Rhodes: email@example.com