Study finds 80% reduction in Real Estate brokerage labor costs
Thursday, September 26, 2024
BOSTON, Sept. 18, 2024 /PRNewswire/ -- AccountTECH, a leading developer of enterprise-class accounting software for the real estate industry, conducted a nationwide survey of outsourced accounting services prices for real estate brokerages. The study reports the average price for outsourcing accounting services as of August 31, 2024.
What does it cost to outsource accounting work for a Real Estate brokerage in 2024
Only some of the work in a Real Estate brokerage can be outsourced. There is fundamental work that needs to be done locally and in person. But some work with sellers, buyers, and agents doesn't need to be done in person - or doesn't involve interacting directly with clients at all. Accounting is a great example of work that is ideal for outsourcing.
Before examining the cost of outsourcing accounting labor, AccountTECH's team examined what real estate brokerages are spending on labor in 2024. For the first six months of 2024, the average labor cost per agent in Real Estate brokerages was $461.99 per agent per month.
This number represents the total labor cost, including all staff, managers, and executives. Obviously, the accounting department is only a portion of the total labor cost in any brokerage. Additionally, the total labor cost per agent per month varied based on the number of offices, managers, and agents at each company.
Current Labor cost per agent per month
The numbers below show the average Total labor cost per agent per month for the first 6 months of 2024
Agent Avg Real Estate brokerage
total labor
count cost per agent per month
0-10 $788.83
11-20 $598.96
21-50 $475.39
51-100 $357.18
101-250 $413.56
251-500 $442.58
500+ $490.79
One important finding is that labor cost per agent begins decreasing as a Company gets bigger. But that trend reverses as a Real Estate company has more than 100 agents. For the larger brokerages, the labor cost of managers and executives increases the unit cost of labor.
Survey results: Outsourced accounting labor cost averages from the AccountTECH survey
AccountTECH finds that generally, when outsourced accounting services are provided to a Real Estate brokerage, the price is generally based on agent count. There is a general assumption that the quantity of accounting work that needs to be performed on a monthly basis is directly related to agent count. For comprehensive outsourcing of all Real Estate brokerage accounting functions, our survey found these average prices as of 8/31/2024.
Agent Avg price of outsourced
accounting
count labor per agent per month *
0-10 $157.64
11-20 $50.68
21-50 $25.44
51-100 $11.82
101-250 $8.31
251-500 $6.79
500+ $5.66
* for this survey we asked accounting firms to assume the company had only 2 bank accounts and 1 credit card
One of AccountTECH's divisions, BrokerOwnerBooks.com, which provides outsourced accounting services, was included in the nationwide pricing survey.
Analysis
Brokerages are struggling with EBITDA margins (or Return on Revenue margins). One key finding of a recent AccountTECH benchmark study was that labor costs in a Real Estate brokerage tend to be relatively fixed and incapable of adjusting quickly to increases or decreases in either closed transaction count or agent count.
The report results make a strong argument for outsourcing some areas of a Real Estate brokerage operation.
About AccountTECH
For over 25 years, AccountTECH's team of real estate accountants and software engineers have been building tools that increase the efficiency of brokerages. Their latest flagship product is darwin.Cloud - a 4th generation evolution of their popular back office accounting software. The team is constantly adding automation and integrations towards the goal of single-point-of-entry. Their motto is: data entry can happen anywhere, but everything winds up in darwin. In their work with clients, partners and each other, they bring integrity to every interaction and every line of code.
AccountTECH www.accounttech.com (978) 947-3600
For sales inquiries, please contact:
Theresa Hurt theresa@accounttech.com
(978) 710-0071
Media contact:
Rizza Batol
rizza@accounttech.com
978.710.0071
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SOURCE AccountTECH
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