Foxtons, a discounter that shocked the industry with a business model and ad campaign boasting 2 percent real estate commissions for limited real estate services, has reportedly tweaked its plans and will now phase-in a 3 percent commission rate for fuller services.
The New Jersey Star-Ledger newspaper and other media in Foxtons’ East Coast market area have reported that Foxtons will be transitioning into a more traditional, full-service brokerage that will post home listings on multiple listing services. Under its original business model, Foxtons would market its own listings and would not post the listings on an MLS. Foxtons operates in New Jersey, New York and Connecticut.
Glenn Cohen, founder of YourHomeDirect, which was the predecessor to the discount brokerage now known as Foxtons, said Monday he could not comment on the change. Cohen’s interests in the company were purchased in March by London-based Foxtons, which had earlier injected $20 million into the U.S. operations of the discount brokerage. YourHomeDirect became known as YHD Foxtons at that time, and the name was changed to Foxtons in April 2003.
The company’s Web site, Foxtons.com, still features promotions for the 2 percent promotion, though the company will reportedly phase in the new 3 percent rate, which is about half of the 6 percent traditional commission rate that is customarily divided between the listing agent and the buyer’s agent in a real estate transaction. According to a September 2003 announcement, Foxtons had 300 real estate agents and an annual marketing budget of about $10 million at that time. Foxtons also has a 100-person call center in West Long Branch, N.J., the site of its U.S. headquarters.
Van Davis, former president and CEO of Century 21 Real Estate Corp., took over in July as president and CEO of Foxtons. Davis could not immediately be reached for comment today.
Mary LaMeres-Pomin, co-founder of Assist-2-Sell, one of the largest residential discount real estate companies in North America, said that change can be a good thing if it benefits consumers. “What the consumer is saying is, ‘Hey, listen everybody. I need your help . . . but please charge me a fee I can live with,’ ” LaMeres-Pomin said.
Discount rates don’t mean much if companies don’t back it up with the service that consumers are looking for, she added. “If they don’t deliver, the customer is going to move on for the next transaction,” she said.
London-based Foxtons was founded in 1981 as a two-person real estate agency in Notting Hill, and Foxtons has about 30,000 clients in the United Kingdom each year.
Send news tips or a letter to the editor to Glenn@inman.com; (510) 658-9252, ext.137.