|
NOW UPDATED FOR 2006!
The most recent benchmarking data for Real Estate Agents is now available, both in print and in downloadable PDF format, with your purchase of the Real Estate Agents Business Benchmarking Guide. (NOTE: 2006 updates not yet available in online HTML subscription version of this guide - please call MAUS Sales Centre on 1 300 300 586 for further info.)
This Small Business Profile presents the results of a survey of Real Estate Agencies for the financial years up to June 30, 2004. The survey was based on 64 businesses.
The challenge in building a profitable real estate business is to mix the stability offered by strong property management, with the blue sky offered by sales. But it's not a case of one or the other.
The issue is to have both parts of the business working well, then accepting the inevitable highs and lows in sales. So creating a sizeable and stable revenue base is important. So too is having sufficient reserves in the business, or available to it, to be able to ride out the bumps. Optimising the cost structure completes the picture, so that the principals can keep the right percentage of the revenue.
Survey Results
These are the results of a survey of real estate agencies. These results should not be considered to be representative of all real estate agencies in Australia. However, they will allow agency principals to identify strengths and weaknesses in the ability of their agency to generate revenue, control expenses and earn sufficient profits. This is done by identifying these elements of agency performance and comparing them with benchmark performance levels currently being achieved by the sample of agencies in this survey.
Most of the real estate agencies in our survey were from the eastern states of Australia. New South Wales was the most heavily represented area, while there were no firms located in Tasmania or the Northern Territory in our sample.
Agencies from metropolitan areas (including major cities such as Newcastle etc) represented around 67% of the entire group. The remaining agencies were divided between larger and smaller regional/rural centres.
Almost 57% of agencies were affiliated to some form of franchise or referral group.
The following table will give you a snapshot of the variance in results found in your industry for various Key Performance Indicators (KPIs). Each KPI (shown in rows) should be considered independently of each other. For example, a business with a high percentage gross profit would not normally also have a high relative percentage of their income spent on wages.
For each KPI, the table shows the average, high and low results found in the business surveyed. The KPIs should not be 'added together' under the high and low columns as they do not necessarily relate to the same business.
The KPIs show the 8th highest and 8th lowest actual result for each performance indicator. The range of values shown therefore covers the middle 80% of reported results.
| Indicator | Average | Low | High |
|---|
| Total Income (thousands) | $910.5 | $312.0 | $1,709.2 | | Wages & Salaries (staff only, not principals) incl. Commissions and Vehicle Allowances | 35.46% | 19.23% | 50.48% | | Rent of Premises# | 4.64% | 2.45% | 6.64% | | Advertising & Promotion | 8.10% | 3.20% | 12.85% | | Printing, Postage & Stationery | 3.38% | 1.62% | 5.46% | | Telephone and Fax | 3.01% | 1.86% | 4.48% | | Staff On Costs | 4.70% | 1.82% | 8.67% | | All Other Expenses | 4.06% | 1.20% | 8.26% | | Net Profit (bps)* | 25.61% | 8.48% | 41.68% | | Properties Managed per Property Manager | 129 | 80 | 192 | | Total Property Management Income per Property Manager | $98,589 | $46,528 | $148,820 | | Properties Sold Per Salesperson, per year ^ | 28 | 15 | 36 | | Average Commission Earned Per Salesperson ^ | $138,900 | $77,275 | $206,815 | | Average Commission per Sale | $5,704 | $3,709 | $8,244 | | Commission Margin | 2.82% | 2.13% | 3.31% |
# calculation excludes those firms which own their own premises *(bps) before principals' salaries and benefits
So, how does your firm 'stack up' against these averages? These results will give you an idea of where your agency falls in relation to the sample and give you a better understanding of your relative strengths and weaknesses.
The remaining expense items each represented less than 3% of total income on average; however some agencies reported some larger results for such items as:
- Franchise and Group Fees, of up to 10.65%;
- All Insurance of up to 2.15%;
- Interest general operating of up to 7.05%;
- Other Occupancy Costs of up to 4.78%;
- Other Depreciation, Lease & Hire Purchase of up to 5.22%;
- Agency Vehicle Expenses of up to 9.99%.
To summarise this, larger agencies had:
- Higher net profit per principal;
- More employees to help service the additional workload, with principal numbers increasing very slowly;
- Lower non-salary costs but higher staff-related expenses;
- Generally higher personnel productivity results, in both sales and property management.
The more profitable agencies:
- Were larger, on average
- Had lower total and non salary-related overheads, leading to higher net profit margins
- Reported higher income per professional and per person
- Had better-performing sales departments.
| 
