Industry News

Let them eat dough

A lesson in converting online real estate leads
Published on Aug 10, 2004

The trouble with Internet mortgage leads is that people prefer to eat bread not dough. The average Web lead is not cooked properly; it's just a name, not even a lead and certainly not a prospect. Here's what I mean: The average Web lead converts (to funding) at less than 3 percent. This low yield is not compatible with the way most lenders operate. These leads are too cold. A typical inbound call converts at 10 percent to 20 percent for mortgage brokers. If one in 10 offline leads is a winner, why buy Web leads that take 30 calls before closing one deal? In the mid-90s, my company, INPHO, thought we were selling bread, but we were selling warm dough. We faxed and e-mailed leads to top lenders–GMAC, Bank of America, Countrywide and Chase–that resulted in closed loans at a $600 acquisition cost. So far so good. That was about half of their cost. But the conversion rate was just 3 percent. That was not compatible with the infrastructure and expectations of the cons...

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