Brokerage Labor Costs Surpass $900 in Boston, Mid-2024
- A benchmark report by AccountTECH reveals that the average labor cost per transaction for brokerages in Boston exceeded $900 in the first half of 2024, specifically reaching $919.50.
- The study found that high labor costs do not necessarily correlate with increased profitability, as evidenced by contrasting examples of companies with varying labor costs and transaction counts.
- The findings indicate a pressing need for the real estate industry to rethink labor cost benchmarks and budgeting strategies to enhance profitability.
On September 11, 2024, AccountTECH published a comprehensive report analyzing labor costs for real estate brokerages in Boston during the first six months of 2024. The report revealed that the average labor cost per transaction reached $919.50, marking a significant increase in expenses for brokerages. Notably, the study highlighted that higher labor costs did not equate to greater profitability, challenging conventional assumptions about operational efficiency in the industry. The analysis included various case studies of brokerages with differing transaction counts and labor costs. For instance, one brokerage closed 248 sides with a labor cost of $1,150 per transaction and maintained profitability, while another closed 250 sides at a lower cost of $723 per transaction but reported a loss. These findings underscore the complexity of the relationship between labor costs and profitability, suggesting that traditional metrics may not provide a clear picture of a brokerage's financial health. The report emphasizes that labor costs are the largest expense for real estate brokerages, necessitating a reevaluation of how these costs are managed. The industry faces a critical challenge in developing a flexible overhead structure that can adapt to fluctuating sales volumes. In conclusion, the study calls for innovative approaches to labor cost benchmarking and budgeting, as the current methods may hinder profitability. By addressing these issues, brokerages can better position themselves for success in a competitive market.