Limited Service Real Estate Brokerage May File For Bankruptcy
September 30th, 2007 Categories: Real Estate News
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Foxtons a large 800 Pound Gorilla in the New York and New Jersey Markets.
The firm according to an article in Newsday.com announced they are releasing 350 of their 380 employees “and may be filing for bankruptcy protection in order to close the business in an orderly fashion.”
In a statement, John Blomquist, Foxtons senior vice president and general counsel, said the company had been “well run, very efficient” and had “a great team that has pioneered a new model in the real estate business — a model which has proven itself and, we believe, will have lasting influence on our sector.”
But, he added, “The plain fact is that we have been battling against a real estate market that recently has turned into a sharp decline, and the company no longer has the liquidity to operate as a going concern.”
Do you see the flaw in that statement? What they are saying is they were able to offer limited services during a screaming hot market when the only skill required to sell a house was getting your license. The business model is not designed to weather the storm as they call it. I don’t know what the surprise is. They act like this is the first time there was a change in the Real Estate market. It was the same during the dot com boom, then the dot Kaboom. During the boom anyone could speculate and make money, none of it was based on profit. I want to let in on a little secret, Real Estate Brokers need to make a profit so they can afford to continue to offer services.
Another note is that this new pioneering model is not new. Every upturn and in all segments of professional services, limited service firms pop up and when the market turns they are gone. It has always been that way and always will.
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