Brokerages Show Signs of Recovery in Profitability
In recent research released by AccountTECH, real estate brokerages exhibited notable improvements in profitability during 2025. The findings suggest that expense reductions played a pivotal role, as firms managed to return to profitability despite a challenging environment. This research analyzed data from 157 brokerage firms, highlighting that many are opting for cost-cutting measures instead of relying on sales growth.
Understanding Profitability Metrics
The study particularly focused on median EBITDA margins—an essential measure of profitability that considers earnings before interest, taxes, depreciation, and amortization. By assessing profitability as a percentage of income, AccountTECH created an equitable framework for comparing businesses of varying sizes. Interestingly, while profit margins slightly improved over the previous year, they are still significantly lower than those observed earlier in the decade.
Trends in Profitability
AccountTECH characterized 2025 as the year of the "efficiency wedge," noting that many brokerages regained profitability despite stagnant sales and a decreasing number of agents. The study concluded that traditional metrics such as increased transaction volumes and a rise in agent counts were absent. Even though the sales volume showed little change, agent numbers dwindled, causing upward pressure on sales costs—the first increase in many years.
Increasing Profitability Among Brokerages
In 2025, the median EBITDA margin increased to 1.68 percent, a rise from 1.35 percent in 2024. This incline indicates a positive trend, with approximately 70 percent of the examined brokerages achieving profitability—a considerable rise from about 61 percent the previous year. This marks a significant improvement compared to 2023, when less than 57 percent of firms reported profits.
Improved Margins for Unprofitable Firms
Unprofitable firms also showed considerable improvements. Their median margins improved from -1.87 percent in 2024 to -1.39 percent in 2025. These improvements contributed substantially to the overall recovery of the EBITDA margin. Meanwhile, those brokerages already operating at a profit saw less dramatic gains, with their median margins rising from 3.22 percent to 3.37 percent—still below historical highs.
Cost Management as a Key Driver
The research by AccountTECH emphasizes that the improvements in 2025 stemmed primarily from rigorous expense management rather than increased sales revenues. Although sales costs climbed, resulting in a decline in gross profit margins from 19.07 percent to 18.14 percent, significant drops in operating expenses enabled overall stability in profitability metrics.
Identifying Expense-Reduction Trends
Operating expenses fell noticeably, decreasing from 17.52 percent in 2024 to 16.39 percent of income in 2025. This substantial reduction was achieved across various categories, with the most considerable savings coming from non-labor operational costs.
A Comprehensive Five-Year Perspective
In reviewing five years of industry data, AccountTECH observed a notable trend: from 2021 to 2023, rising operating expenses largely contributed to declining profitability. On the contrary, in 2024 and 2025, significant improvements in profitability were attributed to tighter expense management, even amid the increase in sales costs.
Industry Insights from Leadership
Mark Blagden, CEO of AccountTECH, pointed out that the 2025 data reinforces the experiences of brokerage leaders, indicating stability in profit margins but highlighting an uneven recovery. He noted that a key takeaway this year was not the attainment of higher profits but the reduction in the number of firms operating at a loss, along with decreasing losses among those that remained unprofitable.
Importance of Financial Transparency
AccountTECH's study underscores the significance of clear financial reporting in helping leaders within the brokerage sector pinpoint areas of improvement and ongoing financial pressures, particularly in times of tight margins.
About AccountTECH
AccountTECH specializes in providing advanced accounting systems, financial intelligence, and benchmarking services tailored for real estate brokerages. The company serves numerous offices throughout North America and Canada, delivering insights that empower brokerage leaders to enhance their operational performance. For additional information regarding the research or inquiries related to brokerage performance, please reach out to AccountTECH.
Frequently Asked Questions
What factors contributed to improving profitability for brokerages in 2025?
The improvement in profitability for brokerages in 2025 mainly came from significant expense reductions rather than an increase in sales revenues.
How did AccountTECH measure profitability?
AccountTECH measured profitability through median EBITDA margins, which reflect earnings before interest, taxes, depreciation, and amortization as a percentage of income.
Was there an increase in the number of profitable brokerages?
Yes, approximately 70 percent of brokerages were profitable in 2025, up from roughly 61 percent the previous year.
Did all brokerages experience the same level of profitability improvement?
No, while a significant number of brokerages improved profitability, firms already profitable saw modest gains compared to those that were unprofitable, which experienced dramatic improvement.
What does the future hold for brokerage firms based on the research findings?
The research suggests a gradual recovery for brokerage firms but emphasizes that returning to the higher profit margins of previous market cycles remains unlikely in the short term.
