Redfin is shutting down its home-flipping business and laying off 13% of staff

• Redfin announced layoffs on Wednesday.
• 13% of its staff will be impacted.

The real-estate company Redfin announced on Wednesday that it would lay off 862 staffers, or 13% of its workforce.

264 of those are related to the company's home-flipping business, RedfinNow, which it will shut down, the company said in a financial filing.

An additional 218 staffers will have their roles eliminated, though they're being offered a new role within the company, Redfin said.

The announcement comes after the company's stock took a nosedive to a record low, after Oppenheimer analyst Jason Helfstein downgraded its stock to underperform and called the business "fundamentally flawed."

Redfin was one of a handful of companies known as instant buyers, or iBuyers — deep-pocketed tech companies that use algorithms to make quick cash offers to home sellers. The business model, popularized by companies like Zillow and Opendoor, has suffered setbacks recently as companies struggle to offload homes at a profit.

A year ago, Zillow announced it would be shutting down its own iBuying division and laying off roughly 2,000 people, about a quarter of its workforce. At the time, Zillow estimated that it would be forced to write down as much as $569 million on the thousands of homes on its books.

Zillow's home-flipping unit, known as Zillow Offers, had been aggressively bidding on homes in an effort to gain market share and catch up to rival Opendoor, an Insider investigation found. That plan backfired when the company was forced to sell thousands of homes at a loss.