Town CEO Andrew Heiberger said it was the cost of commissions and competitive recruiting climate that led to the decision to shutter the brokerage’s resales and leasing divisions last week.
“Due to the new realities of the new marketplace, it is simply impossible [to] profit from those lines of business when considering the primary factors of the rapidly increasing agent commissions stemming from fierce competition to attract and retain the best talent; lead generation platforms; and the disruptions on the tenant side of the rental brokerage business,” he wrote in a Linkedin post.
Related: Town shutting down its sales, leasing business: sources
Heiberger said that in its eight years, Town did $13.5 billion in real estate deals and generated more than $360 million in commissions, but in the end it was “not possible to make sustained profits, regardless of the restructured footprint.”
“Understandably, and to say the least, there are a lot of mixed emotions; and please know that there was no other alternative and every single stone was turned over three times before reaching this monumental decision,” he wrote. “It was for the benefit of all whom were employed by or associated with Town.”
Town on Thursday informed employees that it would be closing down its resales and rental arms while keeping its new development division, as The Real Deal first reported.
Related: What’s to come for Town agents’ millions in exclusives?
Competing brokerages are already looking to hire Town brokers, and agents were told they could take their exclusives to new firms if they paid a 25 percent referral fee to Town.
Heiberger hinted there would be more to come for the company.
“There will be another great endeavor to come,” he wrote. “Stay tuned…”