Foxtons New Money Saver: No CEO

The CEO of Foxtons, the two percent discount brokerage that has been frequently criticized by Manhattan firms for its approach, looks to be out of a job.

Glenn Cohen, who founded Foxtons North America, which operates in the Tri-State area, appeared to no longer work at the company as of the middle of last month after a flap over a Foxtons commercial that aired as a mock news story on a local CBS news broadcast. Others said Cohen left the company because of issues with employees there, possibly in connection with alleged overtime rules violations.

Foxtons did not return calls for comment, but Cohen has disappeared from the company s Web site and has been absent from the company s corporate headquarters for several weeks. One spokesperson told another news outlet she “used to be” Cohen s assistant, but wouldn t confirm whether Cohen is still employed by Foxtons.

Last month, Foxtons notified the New Jersey Department of Banking and Insurance, which oversees the state s Real Estate Commission, that they wanted to change their broker of record, according to a department spokesperson. The broker of record had been Glenn Cohen, according to the department. The company had until Feb. 17 to file a new broker of record.

A spokesman for the New Jersey Department of Labor also confirmed that it was investigating Foxtons for possible violation of overtime rules. A company found guilty would be required to pay back wages and fines, the department confirmed.

Rick O Neil, president of another area discount brokerage, Help-U-Sell Real Estate, said he heard Cohen had left his job “because of problems with employees.”

Foxtons aggressive advertising also appears to have gotten Cohen in trouble.

The company has advertised heavily since its founding four years ago, on radio, in newspapers, on subway cars, billboards, trucks and even on bus shelters, partly a result of a partnership with global media company Viacom.

In an unusual move in late January, Foxtons bought all of the available ad time on an 11 p.m. newscast on Channel 2. The company then promoted its appearance in a series of misleading ads on the radio that suggested the company would be profiled in a news story, and not as part of a commercial.

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The company s website also promoted the appearance, proclaiming, “Don t miss it! Learn the secret [of] Foxtons extraordinary success tonight on CBS 2.”

During the commercial breaks on the TV program itself, Cohen was interviewed on a mock news set about the benefits of working with Foxtons.

Having a single company back a local newscast is highly unusual. After saying the commercial was an “experiment,” a Channel 2 spokesperson later said there wouldn t be any similar ads in the future. It then fired the advertising executive responsible for selling the commercials.

Following the airing and the surrounding controversy, Cohen boasted how well the commercials worked in an advertisement.

“There were more calls on the morning following the broadcast than on any other day since Foxtons inception a little over three years ago,” Cohen said in the ad, according to the Daily News.

Andrew Heiberger, CEO of Citi Habitats, said Cohen s missteps and departure serve as proof that the company has a flawed business model.

He said Foxtons business plan – based on selling homes at one-third the standard commission of 6 percent – is “not sustainable,” because it won t be able to provide services that consumers demand to sell a home.

“Actually, it s really good for the brokerage industry,” said Heiberger. “It clarifies publicly that 2 and 4 percent commission is not workable.”

“If customers are asking, Do you make too much in commission? ” Heiberger said, “This says, we don t. ”

Foxtons was started in London before expanding in 2000 to the United States. Under Cohen s watch, the West Long Branch, N.J.-based company has grown to 400 employees in the Tri-State area, including 280 agents. Only around 5 to 10 percent of the company s business is done in Manhattan, Cohen said earlier. Foxtons has plans to expand in major markets across the United States.