Seattle's Redfin announced on their blog yesterday that they laid off 20% of their employees. Redfin was the industry's first online brokerage for residential real estate with a focus on technology and a consumer-centered business model that promised better results at a fraction of the price. Unlike other soon to be cash-starved startups, Redfin's industry has been under siege since home prices in the US first started plunging a year ago.
We’ve fought like starving animals, and with some success: while industry-wide transaction volumes dropped 33%, we grew revenues by nearly 50%. Traffic grew more than 300%. Even a month ago, we were raising 2009 revenue projections. All our markets, now including Chicago, contributed profits.
But the past few weeks have seen a major reversal. As the stock market wiped out prospective down-payments, tours and offers dropped 30%. Transactions that were done came undone. October will still be pretty good, then we’re headed for a big dip. Hence the layoff. Layoffs are painful for any company, but especially for a startup and especially, I think, for Redifn.
Redfin President and CEO Glenn Kelman plans to stick the course and believes that his startup is a real business with an essential service, a direct offering to paying clients, and the potential of multi-million dollar revenues. Only time will tell.
Redfin is the industry's first online brokerage for residential real estate. We believe that technology, and a consumer-centered business model,... [more]
I really hope Redfin pulls through, and I think they will. Surely it makes sense that people will look for the most cost-effective way to conduct real estate transactions in tough economic times.
However, I'd really love it if realtors could be completely eliminated from the buying / selling process. For years they've done nothing but foster bureaucracy and complexity in order to maintain their position as middle men, and in my experience there are about 100 utterly mediocre agents to every one great agent. And there's nothing worse than hearing one of them offer "advice and insight" about where the market's going.
Of course, all of the above could simply be because I'm still bitter about my last real estate transaction, in which I sold a house in under a week to a buyer I found, and paid my realtor a commission for doing virtually nothing.
