RISMEDIA, Sept. 28, 2007-Just as there seemed to be an optimistic light at the end of the real estate tunnel, Foxtons Real Estate announced it will be closing its doors due to a downturn in the housing market. The West Long Branch, New Jersey-based real estate company, known for its discounted commissions and Mini Coopers, said it is contemplating bankruptcy for an orderly shutdown. According to an article in the Asbury Park Press, the company will continue with only a “skeleton crew”-laying off 350 of its 380 employees.
Calls to the company yesterday from RISMedia were met with a recoded message saying that the discount brokerage was closed.
Foxtons was founded in 1999 as YourHomeDirect.com by Glenn Cohen, an entrepreneur with the idea of paying a salary instead a traditional commission.
According to the article in the Asbury Park Press, the business model, however, was unproven. Real estate agents were unmotivated to show their buyers Foxtons homes, knowing the commission wouldn’t be as much.
Cohen sold his New Jersey and New York-based company, to London-based Foxtons. It was then that commissions were raised to 4 percent.
The article continued on to say that Foxtons was most recently sold in May to a private-equity firm for what Reuters said was $770 million. Its North American operation, however, wasn’t part of the deal.
According to the Asbury Park Press, the company said it has 4,400 current listings, and “the intention will be to preserve the value of these listings, to minimize customer disruption and to dedicate the anticipated revenues to pay creditors.”