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Wealthy Americans Confident Real Estate Boom Will Last
from: Rick HendershotLinknet Real Estate News Digest - December 22, 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 licensed 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 of 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.
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