When is a Realtors commission to high?

What if this question were in reverse, when is a Realtors commission to low?

In the last five years Connecticut, New York and New Jersey home sellers enjoyed the low commissions paid to one Realty franchise offering 1&2 percent commissions leaving the seller with more money in their pocket; or did it? Research has shown by lowering a commission rate, in effect lowers the standards of care one would receive, makes sense - you get what you pay for in this world. Other research has shown that agencies who offer out fewer commissions to the buying side end up reducing the price of their listings as well, or not selling at all. The truth is; everyone wants to save a buck every where you look, however, know where to save and where to spend.

The Simple Truth, selling your home is personal and emotional but most of all, it's a business transaction not a garage sale. Always look for the agent (not just offering) but who can back up what they offer. Below is a recent News Day article.

Foxtons may file for bankruptcy
BY JAMES BERNSTEIN September 27, 2007

Foxtons, the one-time 800-pound gorilla of the 2 percent marketplace in the New York metropolitan area, said it may file for bankruptcy and close its business, explaining it "can't stand in the way of a hurricane" that has come about as a result of the decline in the home mortgage industry. The current home mortgage situation only affected 5% of the buying population. The remaining 95% see homes as over priced today -simple - markets adjust

The New Jersey-based company, which once rocked the real-estate industry by selling homes for as little as 2 percent commission compared to commissions of up to 6 percent at other brokers said in an announcement that it is "releasing" 350 of its 380 employees "and may be filing for bankruptcy protection in order to close the business in an orderly fashion." At least six Foxtons agents handle Long Island listings. Only one could be reached, but declined to comment.

No one answered the phone at the company's headquarters Thursday morning.
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." The sad truth is while it may have been a dollar saving great idea for home sellers, again, you get what you pay for in this world. I hate to make this statement but, a well run very efficient company would answer the phone -sorry I had to put that in - everyone has to eat crow once in a while

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." a company company simply can't survive on a 1% return

"We understand the impact of the action we are taking, but there comes a point where you can't stand in the way of a hurricane, and it is a property hurricane we are facing."

The company's announcement said that it has some 4,400 current listings -- including 314 on Long Island and that it plans to "preserve the value of these listings to minimize customer disruption and to dedicate the anticipated revenues to pay creditors." LISTEN CLOSE HERE, There is no agent representing you, just an agency somewhere very far away.

When contacted on Thursday, Long Islanders whose homes are listed with Foxtons said they were not aware of the trouble. "I didn't hear they were closing," said Laurna Blackwood of Amityville, who has had her home listed with Foxtons for about a month. "Why wouldn't they say, 'We're going out of business'? I'm wondering whether I should call them." Hhmm read back a couple of paragraphs

April Terk, Blackwood's Foxtons representative, could not be reached for comm ent. On the voice mail of her cell phone, she said, "Foxtons is no longer in business," and asked callers to contact her directly by e-mail.

Beth Marten, who heads Home Buyer's Resource Center, a real estate agency in Baldwin that represents home buyers, said she was not surprised to learn that Foxtons announced it is filing for bankruptcy and may go out of business altogether.

"I predicted this would happen a year and change ago," Marten said.

Marten said the fees Foxtons paid brokers which she said at times was as low as 1 percent to 1 1/2 percent did not entice independent brokers or brokers who worked for other agencies to show homes listed by Foxtons.

"I saw them finally go up to 2 percent, but their listings were languishing," Marten said. "The broker was only going to get 1 or 2 percent. There wasn't a lot of interest in showing their houses."

She said also that she did not believe Foxtons hired the best-quality brokers. "They were questionable," Marten said, explaining that they priced the homes they were selling at levels that were higher than the market would allow. "They just didn't have a clue," Marten said. "I don't think other brokers are going to miss them (Foxtons) at all."

Robert Campbell, a professor of real estate finance at Hofstra University, said the low-price agency may have been "under-pricing" its services and working in "narrow" financial margins, a move that could have hurt the company in the weaker market.

Campbell added that sellers in a struggling market also want an agency to devote more time and resources to selling their home, something he said Foxtons could not do with such low co mm commission rates.

Foxtons' Web site said the agency opened for business in March 2000 in North America , and in the early years had more than 1,000 employees and more than 10,000 homes for sale.

Foxtons created a huge advertising splash, spending close to $12 million a year on television, radio and billboard ads. It even used buses, bus shelters and subway platform ads to attract customers.