To all the agents in the house,
My focus the past couple of weeks has been how brokerages are affected by higher mortgage interest rates and apprehensive homebuyers. But what about business models that challenge conventional brokerages?
Sundae, a company connecting homeowners looking for a quick cash sale with potential investors, confirmed to HW Media this week the company laid off 15% of its workforce. The San Francisco real estate company, started by Josh Stech and Andrew Swain of bridge lender LendingHome, reportedly raised more than $130 million during its first three years in operation and touts celebrity investors including Will Smith and Golden State Warriors' Klay Thompson and Andrew Wiggins.
But Stech said Sundae issued pink slips, "In order to protect our future and ensure Sundae is around for decades to come."
The move came after Inman News reported Orchard laid off about 10% percent of its workforce. Orchard is a so-called power buyer, which makes cash offers on homes on behalf of customers who then take out a mortgage loan with the company. Orchard CEO Court Cunningham has said the company prides itself on its ability to use automated valuation models to make fairly precise offers on homes.
Orchard's layoffs, meanwhile, follow Knock, another power buyer, laying off 46% of its workforce in March. And, of course, they come after Zillow, the most high-profile brokerage disruptor of them all, announced 2,000 layoffs in November as it wound down its iBuying program, a move still being carried out.
Layoffs are awful. A former Sundae employee told my colleague Connie Kim she realized she was being let go when her Slack messaging channel was deactivated.
But to take the cold business perspective, layoffs are not necessarily an indicator of a company's failure. While I wrote about Sundae laying off people this week, I didn't write about the roughly 200 people the company hired during the past two years. Perhaps the company truly is recalibrating its long-term viability.
In any case, agents, what do you think of the layoffs at these companies? Are they, in some unsavory way, a confirmation that challenges to the conventional brokerage model don't work? Or are they a harbinger of difficulties to come, which will affect the entire real estate industry?
Please send me your thoughts at mblake@housingwire.com.
Sincerely,
Matthew Blake
Senior Real Estate Reporter
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