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Q1 2024: Real estate agencies show downward trend in net operating percentages

Analyzing trends in net operating percentages and profitability across revenue levels

We continue to see a consistent pattern in net operating percentages as they relate to increasing revenue levels. As revenue increases, there is a general downward trend in net operating percentages, further confirming that higher revenue levels may be associated with increased operating costs or other factors that decrease the proportion of revenue retained as profitability.

For $300-550 and $800-1.5, a decrease in COS suggests increased rainmaker production in Q1, contributing to increased profitability in these ranges. In all other ranges, COS has seen increases, suggesting increased agent recruitment as a strategy for continued growth.

For companies earning $3 million annually, the financial data sets analyzed in Q1 are the same number of data sets in Q4 2023, suggesting consistency and long term sustainability in these well established businesses.

For companies earning more than $3 million annually, there was very little fluctuation in any given category, resulting in a net increase in profitability of just 0.9%. This further supports the conclusion that these businesses have established solid foundational practices that lead to consistency and stability despite an ever shifting market

For companies earning less that $800,000 annually, an increase in salaries suggests an investment in workforce for future growth. On the other hand, companies earning more than $800k annually saw a small decrease in salaries, potentially suggesting a consistent workforce with increased revenue quarter over quarter.

For companies earning between $550,000-800,000 annually, we saw a significant decrease in profitability due to increases in COS, salaries, lead generation, and variable costs. Comparatively, the $800,000-1.5 million range saw a significant increase in profitability due to across the board decreases in the same categories.

At either end of the revenue ranges, only small fluctuations in overall operating expense percentages are observed, suggesting adaptability quarter over quarter with proactive adjustments to increase and decrease various areas to ensure continued profitability.

Across the board, we saw little fluctuation in lead generation percentages, staying consistent around 9.5% in most categories. This suggests effective marketing strategies that scales appropriately with seasonal shifts in revenue. 

Streamlined, RTC Consulting and HWMedia are teaming up to share this data with our readers to help create transparency in the results of over 200 teams. We will publish these results on a quarterly basis roughly 45 days after the end of each calendar quarter.

David Pittiglio is the CEO of Streamlined Business Solutions.

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