Linknet 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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