SoftBank-backed Opendoor has announced a massive layoff, cutting 35% of its employees

According to a statement sent to us by co-founder and CEO Eric Wu, the company has laid off 600 of its employees, which constitutes 35% of its overall team. The Information was first to report the news today.

Like so many sectors of the economy, the residential real estate market has taken a hit as U.S. residents are asked to stay indoors and all but essential services are shut down in most of the country. (Florida continues to operate by its own rules and yesterday decided that World Wrestling Entertainment is an essential service.)

Home sales haven’t fallen as far or as fast as one might imagine, though that picture is changing as the weeks wear on. According to Realtor.com, the number of U.S. homes for sale declined 15.7% year-over-year in the month of March, with the number of newly listed properties falling by 13.1% the week ending March 21 and by 34.0% for the week ending March 28.

In his statement, Wu didn’t include details regarding the degree to which Opendoor  has been impacted by the COVID-19 shutdown, saying only that because the pandemic has “had an unforeseen impact on public health, the U.S. economy, and housing,” the company has “seen declines in the number of people buying, selling, and moving during this time of uncertainty.”

He added that the reduction in force is “necessary to ensure that we can continue to deliver on our mission and build the experience consumers deserve.”

Every company’s management team is handling layoffs differently, of course. In the case of Opendoor, its separation package seems fairly generous as these things go, with laid-off employees receiving eight weeks of full pay and 16 weeks of reimbursement for health insurance coverage. Wu says he will also be donating his 2020 salary to a relief fund for Opendoor employees who may be in “more challenging financial or health circumstances” owing to the virus and that an unspecified number of other executives are also contributing to the fund.

It’s a better deal than some earlier employees received. Even before the coronavirus took hold in the U.S., Opendoor was paring back its employee base. Last summer, as Bloomberg reported at the time, the company fired 50 people and asked up to 300 others in offices around the country to relocate to its Phoenix location or else part ways with the outfit.

Opendoor specializes in “instant buying,” which remains a small but growing part of the residential real estate market, partly owing to the risk it entails. Zillow last fall told The New York Times that it bought fewer than 700 homes in 2018 but expected to be buying up to 5,000 homes per month within five years.

Opendoor meanwhile said it acquired 11,000 homes in 2018. It hasn’t disclosed how many homes it bought in 2019, saying in a December post that it “bought and sold thousands of homes” over the course of the year.

Typically, the company aims to hold homes for less than three months before selling them to a home buyer. To help fuel all those purchases, Opendoor has raised $4.3 billion in equity and debt funding over the years, including $1.3 billion in equity.

Backed early on by Khosla Ventures,  then GGV Capital, the company had in more recent funding rounds strengthened its ties to the traditional real estate market by adding to is backers one of the country’s largest home construction companies, Lennar Corporation. The idea behind the relationship is for Opendoor to help get customers into Lennar-built homes faster, as well as to encourage them to “trade up” where possible.

Opendoor was also the recipient of one of the SoftBank  Vision Fund’s enormous checks, trading a minority stake in the company in September 2018 for a $400 million check from the Japanese conglomerate, which also installed managing director Jeff Housenbold on the company’s board.

Opendoor announced its most recent round — a $300 million financing, including from General Atlantic and others — almost a year ago, at a reported post-money valuation of $3.8 billion.

It’s unclear to what extent the current market will impact that number going forward. Given the scale of its cutbacks, it’s also unclear whether, when the economy begins to re-open, Opendoor will continue to operate in the 21 cities where its services are currently available.

For now, the company has stopped making cash offers on homes. It says on its site that in the meantime, it is continuing to work with third-party buyers who may be able to provide home sellers with cash offers, as well as connecting customers with listing agents in cases where they are needed.