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Friday, 1 December 2006

Saving money when buying real estate

Although the overall returns from real estate are similar to that of stocks in the long term, there are some aspects that make real estate less attractive to some investors:
* its price isn't known daily like the quoted stocks, only when a sale is made. Between sales estimates based on similar sales in the area have to suffice
* it can only be bought and sold in large "chunks" - as they say, you can't sell off one bedroom of a house if you need some cash
* there are relatively high transaction costs compared to buying and selling shares - compare typical stock brokerage fees of less than 1% to real estate agents fees of over 5% in many cases.

At long least competition appears to be starting to reduce fees somewhat. For example AlCan Realty Partners, LLC is offering a 1.5% cash rebate at closing when purchasing Dallas Real Estate. Their website currently lists 50,567 properties. Hopefully similar rebate schemes will become common in all areas, and competition will force other agents to reduce their commissions.


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