Wealthy Americans Confident Real Estate Boom Will Last

Linknet Real Estate News Digest - December 22,competitive. And now that the market seems to
2005 - In spite of worrying signs that the realbe cooling, industry observers expect many
estate market is slowing down, a survey ofnewbies to soon leave the business.
wealthy Americans indicates most remainAs Susan Haskins, president of the Northern
confident property values will continue toVirginia Real Estate Association said, "What you're
appreciate.seeing now are a lot of people coming into the
In a survey conducted by The PNC Financialbusiness thinking they can make a lot of money
Services Group, Inc., 65% of those surveyed saidquickly and easily. But they often have no idea of
they expect to see double-digit increases in valuethe hours that you have to put in, or the
over the next five years. Almost 1 in 3 (31%)commitment. And they will not last very long."
think they will see an increase of 20% or more.==>Rookie Agents get the smallest commissions
According to Nicholas Buss, senior vice presidentTraditionally, real estate agents across the U.S.
of PNC, "as an investment, real estate has beenhave made between 6 and 7% of the sale price
an increasingly dominant asset class over the pastof a home. This is usually split between the buying
five years... In general, wealthy Americans haveand the listing agent. But the hot market and the
not been speculative buyers and they remainentry of many hungry new agents into the field
solidly confident in the long term..."has made things more competitive.
The survey of almost 1,500 wealthy individualsThe overheated market has been giving sellers
across the country showed significant regionalthe impression that houses almost sell
differences. New Englanders were mostthemselves, and this has led to cut rate listing. For
conservative in their expectations; Californiansinstance, some internet-based discount services
were close to the national average; Floridianscharge a flat fee or as little as 1.5% to get a
were twice as bullish as the average, reflectinglisting the the local MLS system.
the soaring property values of the last few yearsAnd of course there are FSBO sites (For Sale By
in their part of the country.Owner) which circumvent real estate agent fees
==>Agents Aplenty as Market Cools Downaltogether.
In many regions of North America, the boom inThe way real estate commissions are shared
real estate seduced many people to turn to realbetween agents and brokers varies across the
estate for a chance to cash in. For example, incountry and around the world. Agents usually pay
Maryland, Virginia and the DC area, the number ofa portion of their commission to their broker to
licensed agents has almost doubled in the last sixcover office and administrative fees. But these
years. The Northern Virginia real estatearrangements vary from office to office and
association has been adding about 300 neweven from agent to agent. New agents often
agents every month. And across the US therehave to pay their broker as much as half their
was a record high of 2.5 million agents by the endcommission. More experienced agents can
of 2004.sometimes set their terms. And the big producers
This has made the agent market much moremay get to keep their entire commission.