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What went wrong at Foxtons

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Editor's note: The following guest perspective commentary was submitted by Derek Eisenberg, an Inman News reader and real estate broker in New Jersey, reacting to the Sept. 27, 2007, story, "Massive layoffs at discount brokerage Foxtons." Discount real estate brokerage Foxtons' downfall is attributable to a series of bad business models, but there are good models out there. When Foxtons' predecessor Your Home Direct was formed, it was billed as "full service for 2 percent." It was never full service. The savings was derived by cutting one broker out of the deal. They did this by not placing their listings in the MLS and essentially forcing dual agency upon the consumer. So the savings of 3.1 percent over the 5.1 percent national average (per Real Trends) was predicated on no MLS exposure and denial of a buyer's right to have his or her own representation. Then Foxtons took over and changed it to a 3 percent commission paying out 1 percent. That too failed. Besides the fact that broker...