Redfin partners with Zillow, plans to lay off 450 employees
Redfin made a major announcement this week regarding a new partnership with Zillow for the syndication of multifamily rental listings. This collaboration will see Zillow become the exclusive provider of these listings on Redfin’s platforms, with Zillow paying a substantial $100 million for the syndication rights. As part of this development, Redfin is implementing significant changes in its operations, including laying off 450 employees within its rental division.
The layoffs are anticipated to be carried out between the current month and July, directly correlated with the partnership with Zillow. Redfin foresees incurring charges ranging from $18 million to $21 million due to this restructuring. Most of these charges are expected to be recognized by the end of the second quarter. The decision to partner with Zillow has strategic implications for Redfin, as it aims to improve overall traffic and profitability within the rental business while enabling the company to focus on its core strengths in online listing search and related services such as brokerage, lending, and title services, as highlighted by Redfin CEO Glenn Kelman.
This move is not the first instance of layoffs at Redfin, as the company has undergone several rounds of employee cuts in recent years. Last month alone, approximately 50 employees across various functions were let go. Prior to that, there were targeted layoffs resulting in the departure of more than 80 employees. The history of job reductions has been a recurring theme, with a sequence of layoffs affecting 470, then 862, followed by another 201 employees over a twelve-month period starting in June 2022. Despite these challenges, Redfin remains committed to its business operations and is set to announce its fourth-quarter earnings at the end of the month.
While Redfin is making changes to its workforce, Zillow has been expanding its presence in the multifamily rental market, evident by the increase in properties advertised on its platform from 37,000 to 50,000 over a year. Additionally, Zillow reported a 17 percent revenue growth to $554 million in the fourth quarter, surpassing analyst expectations and narrowing its losses from $73 million to $52 million, as reported by the Wall Street Journal.
The news of the partnership with Zillow and the subsequent layoffs at Redfin has had an impact on the stock market, with Redfin’s stock price rising more than 10 percent on the day of the announcement. This development marks a significant shift in the real estate and rental market landscape, highlighting the evolving strategies of major players such as Redfin and Zillow in response to changing market dynamics and customer preferences.
