AccountTECH, a leading provider of enterprise-class accounting software for the real estate industry, has officially published results from its latest study, which reveals improvement in the number of profitable brokerages during the first the first half of 2024, as compared to the previous year. According to certain reports, the stated study basically analyzed EBITDA margins for brokerages from January to June 2024, focusing on 100 randomly selected companies known for maintaining accurate GAAP protocols and excluding those inflating profitability through broker/owner personal sales. In essence, AccountTECH’s in-depth analysis found that 62% of the brokerages achieved a positive net operating profit during the first six months of 2024, translating a modest increase from 60% observed for the full year of 2023. More on the same would reveal that, from a more holistic standpoint, these 100 companies closed 51,769 sides with 17,749 agents for the given period. Anyway, talk about the whole value proposition on a slightly deeper level; we begin from a lowdown on average operating profit per agent, a lowdown where we got to know that profitable companies reported an average operating profit of $1,767 per agent for the period, or $294 per agent per month. Next up, we have the average operating profit per side, something which showed profitable brokerages earning $589 per transaction side. Then, the report turns its attention towards losses in unprofitable companies. Going by AccountTECH’s word, unprofitable companies faced an average loss of $1,284 per agent for the period. This reflected a loss of around $214 per agent per month. As for the average operating loss per side, it had unprofitable brokerages losing $462 per transaction side.
Moving on, like we referred to, the study in question also analyzed EBITDA margins, a key indicator of the scale of profitability. Here, almost half of all the surveyed brokerages had EBITDA margin percentages between -3% and +3%. To expand upon that a little bit, an estimated 21% of the companies had losses with negative EBITDA margin percentages between -1% and -2%, thus indicating that a good chunk of brokerages are only slightly unprofitable. Furthermore, the report also informed us on how no more than 5% of all brokerages conveyed EBITDA margin percentages above 9%. Such a detail unsurprisingly emphasizes upon the difficulty associated with maintaining significant profitability in the current market.
“While these results show a slight positive trend, they also highlight challenges for the industry in the coming year. Many brokerages are failing to create adaptive business models that can adjust expenses in response to fluctuating gross profits. Additionally, EBITDA margins of 3% or lower are concerning; such slim margins may not withstand even minor reductions in commission rates. Faced with the possibility that the NAR settlement may drive commission rates generally lower, brokerages may need to accelerate their efforts to streamline overhead costs to attain or maintain profitability,” said Mark Blagden, CEO of AccountTECH.
Founded more than 25 years ago, AccountTECH’s rise up the ranks stems from building tools that increase the efficiency of brokerages. An example of the company’s excellence can be had once you look at its latest flagship product in darwin.Cloud, which is a 4th generation evolution of its popular back office accounting software. Working towards constantly introducing greater automation and integrations to achieve the overarching goal of single-point-of-entry, AccountTECH was also the first ever real estate accounting firm to develop its own first back office accounting software as an internal proprietary tool.
