Subsequent Events

9 Months Ended

Sep. 30, 2022

Subsequent Events [Abstract]

Subsequent Events

Subsequent Events

Wind-Down of RedfinNow and Workforce Reduction—On November 7, 2022, we decided to wind-down RedfinNow and to reduce our number of employees by approximately 862, which represents 13 percent of our total employees. Of these, 264 job eliminations are directly related to the wind-down of RedfinNow. In addition, approximately 218 employees will have their current role eliminated, but are being offered a new role within the company.

Winding down RedfinNow is a strategic decision we made in order to focus our resources on our core business in the face of the rising cost of capital.

The remaining workforce reductions are primarily among our real estate services and headquarters employees in response to macroeconomic conditions. This workforce reduction will reduce our number of lead agents by approximately 197, which represents 9 percent of total lead agents. This action comes in the wake of our June workforce reduction, which was a response to slowing 2022 home sales. Since June, mortgage interest rates have continued to climb and expectations for home sales have come down even further. Today’s workforce reduction assumes a housing downturn that lasts at least through 2023. Since April 2022, through involuntary reductions and attrition, we have reduced our total number of employees by 27 percent, including a reduction in lead agents of 28 percent.

We expect to complete the liquidation of our RedfinNow inventory in the second quarter of 2023. While the bulk of the workforce reduction is occurring today, we expect to complete this workforce reduction and wind-down of RedfinNow promptly after selling the remaining properties currently in inventory, likely into 2023.

In connection with the preparation of our financial statements for the third quarter of 2022, we recorded an $18,274 write-down of inventory associated with RedfinNow as a result of purchasing homes during 2022 at higher prices than RedfinNow’s current estimates of the values if we were to sell the homes as of September 30, 2022, net of selling costs.

Amendment of Secured Revolving Credit Facility—In connection with our decision to close RedfinNow, on November 4, 2022 we amended our secured revolving credit facility to wind it down in an orderly manner. This amendment:

•provides that no further advances may be made under the credit agreement,

•amends certain financial covenants to ensure compliance throughout the wind-down period,

•requires us to apply cash available for distribution to the repayment of outstanding principal amounts until all outstanding amounts are repaid before distributing cash to Redfin, and

•requires us to terminate and pay off the remainder of the facility on the earlier of January 30, 2023 or when the facility’s credit balance reaches $30,000.