Good Bye to a Discount Realty Company

Image Courtesy of Indymedia Ireland

The writing is on the wall for discount realty companies……..Foxtons, the fourth largest real estate company in New Jersey (and one of the largest in the NYC Metro area) is closing up shop for good. What happened to them?This company arrived on the scene in 2000 with a big splash, promising rock bottom commissions from their agents. Sellers lined up quickly to get their home sold on the cheap. Everything looked great - until the downturn, when it went south in a hurry. Now they are looking for someone to take over the 4,400 listings left in the dust.

The reason Foxtons came and went so quickly is that the lowest possible commission is a promise that is full of problems. Low prices always mean that you have to make it up on volume, which is to say the pressure to “churn
and burn” felt by Realtors is even stronger. There isn’t as much incentive to get the best possible price for the client, but there’s a lot of incentive to move houses quickly. The seller is the loser, and it’s all because they were too cheap to realize that the investment in a house has to be matched by a small investment in the best Realtor possible. Now whose going to take and market 4,400 listings in this market at a 2% commission?

What did Foxtons in is the simple fact that we are in a market where you can’t make it up in volume. A few bad months were bound to break them, and now they are gone. Clearly, being the rock bottom on commissions didn’t make for a good business model. Sellers need to understand that they aren’t in their own best interest, either. You usually do get what you pay for.

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