Thu Sep 12 13:22:00 UTC 2024: ## Real Estate Labor Costs Remain High Despite Fewer Transactions: AccountTECH Study

**BOSTON, Sept. 11, 2024** – A new benchmark report from AccountTECH, a leading accounting software provider for the real estate industry, reveals that labor costs remain a significant challenge for brokerages, despite the recent slowdown in transactions. The study, which analyzed data from 100 randomly selected real estate brokerages from January to June 2024, found that the average labor cost per transaction exceeded $900.

**Key Findings:**

* **High Labor Costs Persist:** Despite fewer transactions being closed, the average labor cost per transaction remained high, suggesting an inflexible cost structure.
* **Labor Cost Not Predictive of Profitability:** The study surprisingly found no direct correlation between labor costs and profitability. Even brokerages with high labor costs per transaction (up to $4,400) could still be profitable.
* **Industry Needs New Benchmarks:** The report argues that traditional benchmarks based on transaction count or agent count are no longer effective in evaluating labor cost efficiency.
* **Labor Cost as a Percentage of Revenue is the Key Indicator:** The study found that the only reliable predictor of brokerage net profitability is labor cost as a percentage of total revenue. This formula allows for accurate prediction of a brokerage’s net profitability based solely on labor costs.
* **Outsourcing as a Solution:** As brokerages seek to manage costs effectively, outsourcing non-core functions like accounting is becoming increasingly popular, with the potential to reduce accounting labor costs by up to 90%.

“Our industry needs a new way to benchmark for labor cost that isn’t based on transaction count or agent count,” said Mark Blagden, CEO of AccountTECH. “Changing the way we budget for labor is crucial for companies aiming to optimize profitability.”

The report highlights the need for real estate brokerages to adapt their cost structures to the changing market conditions. By embracing new cost management strategies and utilizing data-driven insights, brokerages can improve their profitability and navigate the challenges of the evolving real estate landscape.

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