Low Commission Brokerage Dies In the Slump

September 27th, 2007 — Real Estate

Foxtons was one of the early innovators in the low commission 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 other agents did not want to show their homes as being commission based their was very little money for them. Once the market broke, so did Foxtons and now the company is looking at bankruptcy and cutting most of it’s staff.

While it is a shame for the employees that are losing their positions, it also is a testament to the innovative spirit in America. While the real estate sales model is fairly stable, innovators are still able to work and try and build a better mousetrap. Their will be many failures and near misses along the way, but that innate American sense of we can find a better way leads to innovation for the whole industry over time.

So, goodbye Foxtons, but thanks for trying something new and different.

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