Foxtons, the discount brokerage that has drawn the ire of many in the industry with a business model and ad campaign boasting 2 percent real estate commissions, has tweaked its plans and will now phase in a 3 percent commission rate for fuller services.
Foxtons will become a more traditional, full-service residential brokerage that will post home listings on multiple listing services, according to the Star-Ledger newspaper in Newark.
Under its original business model, Foxtons marketed its own listings and would not post the listings on a MLS.
The company’s web site, Foxtons.com, still features promotions for the 2 percent package, though the company will reportedly phase in the new 3 percent rate, which is still half the traditional commission rate.
Heads of some Manhattan firms, including Citi Habitats president Andrew Heiberger, had called the 2 percent business model “unsustainable.”
“At the end of the day it’s not going to be two percent,” Heiberger
predicted at the end of last year. He said the company’s business model shortchanged sellers in not conducting weekly open houses, in not marketing properties to the broker community or mounting professional marketing campaigns, and in not being able to draw enough traffic to its web site.
“It’s very na ve and unprofessional of them to think all a broker does is list and show. Forget the two versus six percent issue. You could lose out on, say, 14 or 15 percent of the value of your home in selling it incorrectly,” he said.
Van Davis, former president and CEO of Century 21 Real Estate Corp., took over in July as the head of Foxtons after the departure of former chief executive Glenn Cohen.
Cohen, who founded the company in 2000, said he could not comment on the change.
The West Long Branch, N.J.-based company operates throughout the tri-state area with around 300 agents, but only has a small presence in Manhattan.