The pros and cons of buying real estate leads
The most important question you'll ever answer during your real estate career is simply: How do I get more leads?
Fortunately, there are a lot of ways to generate real estate leads. For example, you can mail out postcards or set up a Facebook ad campaign. You can get creative on Instagram or work your email list. You can even focus on generating positive word of mouth from your previous clients. All of these strategies can earn you qualified leads.
But what if you're just starting out and you don't have an established network to tap into? What if your marketing budget is tight and you're looking to squeeze a lot of results out of a small investment?
This is why many agents choose to work with a lead generation company. You can start from scratch and you don’t need a huge marketing budget. Whether you can afford to spend $50 a month or $5,000+, there’s a lead gen company out there to fit within your budget.
In this post, we weigh the pros and cons of working with a lead gen company to help you decide whether or not it’s the right choice for you. Let’s get started.
In a nutshell, a real estate lead generation company offers a steady stream of buyer and seller leads in your area. Usually, you'll pay a monthly service charge, however some companies prefer to take a referral fee instead.
Some companies offer exclusive leads. Others offer a greater number of leads, but these leads are shared between you and their other agents.
Can you generate leads on your own without the help of an outside company? Absolutely. But here's why you should consider buying leads from an established lead gen company:
Because time is money, every second that you invest in generating your own leads is equivalent to spending your own cash. Hiring a real estate lead generation company frees up your time. Instead of sourcing leads yourself, you get a list of leads delivered to your inbox. This allows you to nurture prospective clients.
Finding and nurturing leads are essential tasks, but it’s difficult to find the time to do both each day. Hire a service to help you with the former so you can focus on the latter.
Instead of attempting to generate one lead at a time, you can collect multiple leads at once. This allows you to scale your marketing efforts.
Why knock on one door when you can knock on dozens simultaneously?
This is what happens when you work with a lead generation company. You’re handed multiple leads that you can then add to your pipeline. Because you have more than one lead to follow up on, you’re able to automate the nurturing process. Not only does this save time and effort, but it also means that your pipeline is never empty.
The events of 2020 changed the real estate game, and we’re all navigating the new normal brought about by the global pandemic. If your old ways of generating leads are no longer possible due to social distancing mandates, now’s the time to try something new. People are still buying and selling and they still need your help. You’ve got to come up with new ways to find them.
Buying leads allows you to do just that. You’re able to continue real estate prospecting without leaving your home.
Before you sign up with a lead generation company, here are a few reasons why you may want to be cautious:
You already know that you must spend money to buy leads. Remember that you get what you pay for. If you go with the cheapest package from the cheapest lead gen company, you’re not going to get premium leads. Plus, you’ll likely be competing with a lot of other agents for those clients.
If you can’t afford to work with a premium company (like the ones we list below), don’t go for the cheapest solution. You’ll have wasted your money with nothing to show for it.
Once you do get leads, focus on your cost per conversion instead of your cost per lead. How much do you have to pay to get a conversion and is the cost worth it? If you pay $399 per month and convert one solid client every 3 months, is it worth the price that you’re paying?
Not all leads are equal.
Some lead gen companies offer better quality leads than others and the price usually reflects the value that you’ll receive. You can't expect to pay bargain basement prices and get excellent, qualified leads.
Also, not every company shares your definition of “qualified.” Some leads may want to buy a home next year. While that may fit one company’s definition of “qualified,” you may prefer to work with someone who’s ready to buy now. If that’s what you’re after, hire a lead gen company with a stricter qualification process.
If you choose the wrong lead gen company, you'll sabotage yourself in two ways. Not only will you end up with leads that aren't ready to buy or sell, you'll also take money from your marketing budget to do so. This is frustrating for you, but it’s also frustrating for those you’re prospecting.
All three of the above concerns can be remedied by following these tips. If you’re ready to sign up with a lead generation company, here’s what to look for:
Don't get lured in by low prices. It may seem like a good deal, but if you don't end up with quality leads who are ready to move now, you're paying for nothing. Also keep in mind that lower prices equal more competition. These lead gen companies can afford to charge you less because they're sharing the same leads with more real estate agents. Exclusivity always costs you more.
Before signing up with a real estate lead gen company, do your due diligence by checking for independent reviews. Don’t just rely on the glowing testimonials on their website, but also do a quick Google search to read the experiences of other agents. While we list the most popular lead gen companies in this post, it’s not an endorsement.
What is your real estate speciality? Do you prefer to work with buyers or sellers or both? Do you prefer to work with first time buyers or investors? What property type do you prefer to work with— luxury, city, retirement? Find a lead gen company that offers leads in that same niche, if possible. This will reduce frustration on your end as you comb through leads for a suitable fit.
Does the company provide leads in your target area? If the company offers leads in a nearby city, that's not good enough unless you're willing to work in that area, too. Work with a company that can offer hyper-local leads so that you don’t find yourself traveling 100 miles to close a sale.
Here’s a round up of the most popular real estate lead generation companies (no endorsement implied):
Is it bad to buy leads? Of course not— that's what marketing is. You're constantly buying the attention of your audience, whether through advertising or simply finding potential clients who may need your help. By working with a real estate lead generation company, you save yourself time and effort in tracking down potential clients so that you can focus on selling your services.
Keep in mind that acquiring leads is not the end of your marketing strategy, but just the beginning. Once you get those leads, you'll need to convince them to work with you, and you'll do that by nurturing and educating them. Work with a lead gen company to jumpstart your overall marketing outreach.
Check out these related posts for what to do after getting your real estate leads: