The real estate industry is in many ways not very different from other sales/commission-based businesses. A real estate agent’s work and performance are highly-monitored to pinpoint efficiencies and potential inefficiencies that can be improved upon. Likewise, real estate agents are awarded commission for their success just like inside/outside sales associates.
Real estate accounting software is the driver that enables the performance monitoring, performance data analysis, and reporting and dashboards. In addition to traditional accounting software features, these systems offer new easy-to-use efficiencies for closing real estate sales, logging the sale info in a database for future analysis, and calculating and distributing commission.
We've put together this buyers guide to highlight the features and trends you need to keep in mind when evaluating new accounting software for your real estate business.
Here's what we'll cover:
What is real estate accounting software?
Specifics for the real estate industry aside, general accounting software offers various applications and features for monitoring and managing financial happenings within an organization. At its most basic offering, accounting software should typically include the following capabilities:
- Bookkeeping/general ledger
- Accounts receivable and payable
- Payroll and commissions
- Bank reconciliation
- Reporting and analytics
These are common features found throughout most all accounting software. They enable users to more easily and accurately review, monitor, and predict costs and expenditures of the organization at large as well as individual business units and even employees.
Real estate accounting software offers these same capabilities, but it has more specific features and benefits tied to the housing industry. For example, with accounting software for realtors, it’s easy to securely share key business information with realtors, home owners, and other interested parties wanting information about their investments.
In addition to a robust set of features and functionality, real estate finance software helps you monitor the progress of ongoing development projects and property maintenance. Financial information can be grouped by property, development or unit. These back office capabilities are a key value-add for the various real estate accounting software vendors.
Common features of real estate accounting software
In addition to core capabilities of traditional accounting software, these real estate-specific systems typically include the following features:
|Communication and contract tools
||Automatically generate and customize templates for contracts and communications with buyers, sellers, other agents, investors, banks, brokers, title companies, and other invested parties.
|Real estate property development management
||Monitor on the progress of all new development projects, residential and commercial, as well as property renovations for individual homes. Enables real estate managers to project upcoming capital from sales for new developments.
||Ensures that you can get access from anywhere. Some real estate accounting systems include an accompanying app for iOS and Android while others are simply compatible with mobile browsers.
||Helps you easily and automatically calculate agent commissions and fees. Can also monitor annual commission generated by individual agents for salary capping, extended pay outs etc.
|Work order management
||Uses your system to monitor the status of property repairs and upgrades. Tracks time, materials, and other resources accordingly to gauge overall cost of each work order.
Benefits and potential issues
The primary benefits of adopting a financial management systems for your real estate business are crystal clear. These accounting systems offer better visibility around where your money comes from and where your money goes. This transparency into your costs and expenditures leads to more informed, financially responsible decision-making.
In addition, systems can generate a plethora of easily understood reports in a variety of ways to summarize this information cleanly for the right audience. Many systems also offer actionable dashboards that provide even greater ease for understanding the key takeaways from data analysis.
While the benefits of real estate accounting systems are widely apparent, there are a number of issues that should be considered as well. Many real estate accounting and financial software include most of the back office capabilities previously described, but not all systems do. Those that don’t will need to integrate with existing customer relationship management or other relevant software.
Another potential issue you’ll want to keep in mind when selecting your accounting software is scalability. Where do you see your real estate company in 2 years? 5 years? If you are projecting a lot of growth for your organization, you’ll want an accounting system that can scale with you. In other words, you’re accounting system should easily add information on properties and offer a quick way to look up existing and previously sold property data. The same is true for a database of employees/agents, contractors, home buyers, and other invested parties. You’ll want to easily access and draw references from these databases for future use.
Evaluating real estate accounting software
With all these features and benefits and potential issue associated with real estate accounting programs, it's crucial that you all the right questions when evaluating your new system. Putting in the extra time is definitely worth it. Finding a great system can streamline many of the essential day-to-day tasks, which frees up extra time to spend with current or prospective home buyers or for other strategic work. Having more time to focus on customers will serve to help improve the quality of service and customer experience you provide home buyers. This goes a long way in retaining customers and gaining referral business from customers' friends and family.
The system can automatically send email notifications to agents, calculate commissions, and generate listing forms and welcome letters. Well-organized solutions can also record and sort all transaction information for a given contract.
When evaluating these systems, buyers should consider the following:
- Does it need to be able to support several different agent pay rates?
- Does the user need a system that can handle a high variety of properties?
- Should the program include online communication tools?
- Does the user handle many different transactions on a regular basis?