AccountTECH study finds average sized Real Estate brokerages have PPP that is 10 times higher than the largest companies

November 11, 2024 - Boston, MA – AccountTECH announces the release of its latest white paper: Production Per Person (PPP) Analysis of Agent by Quartiles: Insights into Efficiency and Agent Roster Composition.

Abstract

This white paper examines the correlation between agent count and production per person (PPP) in companies categorized by quartiles, based on their PPP. The data indicates that companies with lower agent counts tend to achieve higher PPP, suggesting a significant impact on productivity per individual agent due to a company’s size. This report analyzes PPP data across quartiles to uncover additional insights and trends related to agent productivity and efficiency.

Introduction

In analyzing sales productivity, one common metric is Production per Person (PPP), which assesses individual contribution by dividing total sales by the number of agents. In AccountTECH’s analysis, the database researchers created a dataset categorizing companies into quartiles based on their Agent’s AGCI PPP values (AGCI is an abbreviation for adjusted gross commission). The main objective is to understand the relationship between company size and PPP and to identify patterns in how companies can maximize efficiency.

Dataset Overview

The dataset categorizes agents into four quartiles based on PPP, providing: 
• Average and Median PPP: Production per person for agents in each quartile.
• Agent Count: The average, median, and maximum number of agents in the companies of each quartile.

Table 1: PPP and Agent Count Data by Quartile

Key Findings

Relationship Between Agent Count and PPP
A noticeable trend in the data is that companies with fewer agents generally achieve higher PPP values. The Top Quartile, with the highest average PPP of $106,489, has an average agent count of 59. In contrast, the Bottom Quartile, with an average PPP of only $10,840, has an average agent count of 297. This inverse relationship suggests that smaller companies generally operate with higher individual productivity, possibly due to more targeted oversight and coaching, or enhanced motivational factors beyond personal income for each agent.

Figure 1: Average PPP vs. Median PPP by Quartile

Quartile Analysis of Agent Count Distribution

Examining the minimum and maximum agent counts within each quartile reveals a broad distribution in team sizes, especially in the Bottom Quartile, where agent counts range from under 10 to 4,574.

In every quartile, there were some companies with agent counts less than 10 agents. This suggests that higher PPP (and the lowest PPP) can be attained by any sized company – with some caveats. In the study results, there was no company in the Top Quartile with more than 340 agents. Furthermore, among the companies where the AGCI PPP was above $50,000 – none of these companies had above 622 agents.

This variation might indicate that larger organizations face challenges in maintaining high PPP, possibly due to difficulties in coaching and developing a geographically dispersed workforce.

Median PPP as a Consistency Indicator

The median PPP aligns closely with the average PPP in the top two quartiles, indicating that companies in these groups tend to have more consistent productivity levels among agents. In companies where AGCI PPP varies widely from median AGCI PPP, there are always some high producing agents lifting the AGCI PPP higher – or non-performers dragging the PPP down. For example, in the third quartile, the difference between average and median PPP indicates that some higher producing agents are making the average PPP higher than the $30,696 median.

Conclusions

The analysis reveals a significant correlation between company size and agent productivity. Companies in the Top Quartile have fewer agents and consistently show higher PPP, suggesting that efficiency is more commonly achieved in smaller companies. Importantly, in every quartile, there were companies with agent counts far above the average agent count for the quartile. This is proof that building a company with high AGCI PPP is attainable for companies of vastly different size. 

About AccountTECH

For over 25 years, AccountTECH's team of real estate accountants and software engineers have been building tools that increase the efficiency of brokerages. Their latest flagship product is darwin.Cloud - a 4th generation evolution of their popular back office accounting software. The team is constantly adding automation and integrations towards the goal of single-point-of-entry. Their motto is: data entry can happen anywhere, but everything winds up in darwin. In their work with clients, partners and each other, they bring integrity to every interaction and every line of code.

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