Real Estate Broker May Lay Off 500 : Housing: The move by Jon Douglas Co. is seen as more fallout from the recent slowdown in home sales.

Jon Douglas Co., one of the best-known real estate brokerages in Los Angeles, is preparing to lay off as many as 500 agents, or about 20% of its sales force, the company confirmed Wednesday.

The news is the latest evidence of the continuing deterioration in California’s residential real estate market, whose decline accelerated after Iraq’s Aug. 2 invasion of Kuwait sent consumer confidence plunging.

On Tuesday, Great Western Real Estate closed its new home sales division and fired 39 full-time employees.

“Eight weeks ago, the (business) faucets were shut off,” said one interior decorator in Orange County whose livelihood is highly dependent on new-home sales.

In a phone interview, Jon Douglas said he has ordered managers of his 36 offices in California to evaluate the least productive agents--the bottom 20%--and decide whether they should be fired.

The company has more than 2,400 agents in offices, mainly in West Los Angeles, Hollywood and the San Fernando Valley. “What I told our managers is, ‘If . . . the agents are not doing their job, then you’ve got to get rid of them,’ ” said Douglas, whose firm is one of the 10 largest real estate brokerages in California.

Among the early casualties were at least 10 agents in the Marina del Rey office who were fired last Friday, according to one of those let go. Several were said to be trainees who had only begun.

“It was a shock to a lot of hard-working people who believed they wouldn’t be let go unless they were dishonest or evil,” the fired agent said.

One rival applauded Douglas’ move. “To the degree he is laying off nonproductive real estate agents . . . I think it’s an intelligent move that every large, legitimate regional brokerage is examining very closely right now,” said Rick Merrill, president of Prudential California Realty in Beverly Hills.

Another rival, Fred Sands, questioned the wisdom of the move, pointing out that firing agents does not save much money because they work on commission.

Douglas said the managers should complete employee evaluation within two weeks, leading to a staff reduction of as many as 500. He said the number, though, could be “much less.”

Times Staff Writer David W. Myers contributed to this article.