Wealthy
Americans Confident Real Estate Boom Will Last
by Rick Hendershot
Linknet Real Estate News Digest - December
21, 2005 - In spite of worrying signs that the real estate market is
slowing down, a survey of wealthy Americans indicates most remain
confident property values will continue to appreciate.
In a survey conducted by The PNC Financial
Services Group, Inc., 65% of those surveyed said they expect to see
double-digit increases in value over the next five years. Almost 1 in 3
(31%) think they will see an increase of 20% or more.
According to Nicholas Buss, senior vice
president of PNC, "as an investment, real estate has been an
increasingly dominant asset class over the past five years... In
general wealthy Americans have not been speculative buyers and they
remain solidly confident in the long term..."
The survey of almost 1,500 wealthy
individuals across the country showed significant regional differences.
New Englanders were most conservative in their expectations;
Californians were close to the national average; Floridians were twice
as bullish as the average, reflecting the soaring property values of
the last few years in their part of the country.
Agents Aplenty as Market Cools Down
In many regions of North America the boom in
real estate seduced many people to turn to real estate for a chance to
cash in. For example, in Maryland, Virginia and the DC area, the number
of licenced agents has almost doubled in the last six years. The
Northern Virginia real estate association has been adding about 300 new
agents every month. And across the US there was a record high 2.5
million agents by the end of 2004.
This has made the agent market much more
competitive. And now that the market seems to be cooling, industry
observers expect many newbies to soon leave the business.
As Susan Haskins, president of the Northern
Virginia Real Estate Association said, "What you're seeing now are a
lot of people coming into the business thinking they can make a lot of
money quickly and easily. But they often have no idea of the hours that
you have to put in, or the commitment. And they will not last very
long."
Rookie Agents get the smallest commissions
Traditionally real estate agents across the
U.S. have made between 6 and 7% of the sale price of a home. This is
usually split between the buying and the listing agent. But the hot
market and the entry of many hungry new agents into the field has made
things more competitive.
The overheated market has been giving
sellers the impression that houses almost sell themselves, and this has
led to cut rate listing. For instance, some internet-based discount
services charge a flat fee or as little as 1.5% to get a listing the
the local MLS system.
And of course there are FSBO sites (For Sale
By Owner) which circumvent real estate agent fees altogether.
The way real estate commissions are shared
between agents and brokers varies across the country and around the
world. Agents usually pay a portion of their commission to their broker
to cover office and administrative fees. But these arrangements vary
from office to office and even from agent to agent. New agents often
have to pay their broker as much as half their commission. More
experienced agents can sometimes set their terms. And the big producers
may get to keep their entire commission.
Linknet
News publishes regular news digests in article and RSS format.
Rick Hendershot may be contacted at http://www.small-business-online.com
or rh@small-business-online.com
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