October 31st, 2007 · 3 Comments
As I previously reported, Foxton’s the now-defunct east coast discount shop, is, well, defunct. They recently fired most of their staff and declared bankruptcy. What to do with the thousands of listings they had, however?
RIS Media reports that a tranche of some 1400 of them have been taken over by another broker, Fillmore, for about $110,000, which puts a value of $78.57 per discount listing. With most agents spending hundreds or thousands of dollars in acquisition costs per listing, this sounds like an absolute bargain.
However…these being discount listings, the math might be different. For a full service listing netting, say, 2.5% on the listing side, I’d be willing to pay significantly more than $78.57. I believe Foxton’s, however, only charged a few thousand dollars per listing, out of which they had to cover employee costs (their agents were largely salaried, not commissioned), office costs, and the nifty little cars each agent got. This model only works well in volume, when the market is spinning along comfortably. With the market slowdown, however, things didn’t go so well. As Foxton’s VP of Sales Mark Horvat delicately puts it:
We regret to inform you that, due to the recent down turn in the residential real estate market, Foxtons has decided to conduct an orderly liquidation of its business.
If Foxton’s couldn’t make it happen with their fees, how will Fillmore manage it? Only two ways to do so profitable that I can see:
Charge more. This is a non-starter, however. The listing agreement that Foxton’s clients signed specified a certain listing fee, and Fillmore would be contractually bound. Mark Horvat again:With the exception of the identity of the listing broker, all of the terms of your listing agreement with Foxtons would remain the same.
Lower costs. Fillmore doesn’t seem to be going down this road either. It appears they’ll be launching new satellite offices, hiring some 40 top-performing Foxton’s agents, buying their agents laptops, renting them cars, and putting them through their “Fillmore University” training program.
The math just doesn’t make sense to me. If Foxton’s couldn’t swing it financially, how is this not financial suicide for Fillmore to take over the listings at the same fee, with the same cost structure? What am I missing?
Foxton’s did not, apparently, have any Boston coverage. If it did, I find myself wondering if Redfin might have tried to purchase any of those listings.
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Tags: * Export · Fillmore · Foxtons · Industry · Redfin
September 27th, 2007 · 27 Comments
Exciting times indeed in real estate! Market woes, mortgage troubles, bankruptcies, lay-offs…
Adding to the bad news is that Foxtons, the UK-based discount real estate brokerage, is laying off 350 employees from its New York and New Jersey operations. Some have predicted that this down market will weed out the non-traditional players [see comments section], Redfin being the company most commonly named. Michael Wurzer, meanwhile, says his long-time prediction of declining agent numbers may finally be coming true.
Inman reports that Move.com, the 800-pound gorilla of the business, is being sued by Active Rain, the utterly addictive 50,000-strong online real estate community. It has been an open secret in the real estate world that Move.com was positively salivating over Active Rain’s strong viral network of real estate professionals, and that negotiations had broken off. Now the full story has come out. Active Rain’s side of the story is, essentially, that Move.com took a page out of Microsoft’s playbook of the 1990’s, before they got smacked down by some unfavorable court rulings: court a smaller company, find out everything you can about its business model, technology, and market…then break off the talks at the end and do it yourself. Move.com, meanwhile, says that nothing Active Rain showed them during negotiations was even remotely earth-shattering.
ActiveRain’s official statement to the ActiveRain community: (login required)
Members of the ActiveRain Real Estate Community,
Recently Inman News reported on a lawsuit brought by ActiveRain against Move, Inc. Of course reports of this nature raise a lot of questions, and it has always been a part of our culture to openly discuss things with our community. We would like to be able to discuss these issues more with you. However, since this is a matter of pending litigation, our counsel advises us not to comment.
Should you be interested in the positions of ActiveRain and Move, Inc. in this lawsuit, attached are ActiveRain’s Complaint and Move, Inc.’s Answer filed with the Court in this proceeding.
We thank you for your continued support and understanding.
ActiveRain members, by and large, appear to be supportive of the company, suspicious of Move.com’s intentions, but perhaps a bit concerned that ActiveRain would have considered consorting with Move.com in the first place. The delightful and ever-opinionated Laurie Manny says: [boldface mine]
Imitation is the most sincere form of flattery.
How did Realtor.com/Move.com expect to become successful without us, the membership? Realtor.com has been repelling Realtors with their high prices and lack of performance for well over a year now. Free blogs - for how long? They do not rank up on the engines now on their own, they need AR to do that. What are they offering the membership that we do not already have? Ok, so maybe in about 6 months we would all acheive similar rankings to what we already have?
I think you guys at AR are fantastic, but I have to ask. Why the hell did you jump into bed with such losers to start with? If they were going to pay it somebody else would have as well.
Live and learn.
Other commentary on the same story:
Pictures courtesy of thisfabtrek.com, foxtons.com, gorillahub.com, move.com, and activerain.com
Tags: Active Rain
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Tags: Active Rain · Countrywide · Foxtons · Industry · Move.com · Redfin