New Jersey Discount Real Estate Broker Foxtons Calling It Quits

Headline News, The largest discount Real Estate brokerage in New Jersey, Foxtons is closing down and going out of business. 

As reported on CNBC, Foxtons will stop doing business as they are out of money and cannot continue to pay their employees.

It will lay off 350 of its 380 workers and intends to keep 4,400 listings on the market.
Senior vice president John Blomquist tells The Asbury Park Press the company no longer has the liquidity to operate as a going concern.
Foxtons was founded in 1999 on the principle that consumers shouldn’t pay a 6 percent commission. Agents were paid salaries and customers were charged 2 percent. The company was sold in 2004 and eventually commissions were raised to motivate agents to show Foxtons’ homes.  via Newsday.com

According to Inman news, Foxtons was one of the early innovators in the discount real estate model and focused on the high priced New Jersey bedroom communities. They offered a 2 percent commission to sellers and their agents were on salary, not commission.

The company struggled even in the heart of the boom as agents with other real estate companies who were on strait commission did not want to show Foxtons listed homes as being commission based their was very little money for them. Once the market slowed down Foxtons business model was no longer viable, and now the company is looking at bankruptcy and cutting most of it’s staff.

Just a little education, the discount real estate brokerage model is highly dependent on doing large volumes of business, and obtaining buyers which they hope to take to homes which are listed with full service brokerages.  That way discount brokerages can bring in more revenue than they do on their own listings selling.

Just my opinion, but Foxtons going out of business will not have much impact on the highly competitive New Jersey Real Estate marketplace.  I have been watching homes listed with Foxtons over the past 6 months in Morris County, Union County, & Essex County New Jersey.  During that time, it seemed that the vast majority of Foxtons listed homes would expire without selling, and then go on to be listed with a full service New Jersey Real Estate broker.

• Newsday Foxtons Report

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