According to our research, online leads drive some portion of sales for over 80 percent of real estate pros, yet it’s more important now than ever to take a targeted and measured approach to digital lead capture and follow-up, as the cost of online leads over the last decade has increased while their return on investment has declined.
You can be a master of contracts, closing guru, housing market expert and negotiator extraordinaire and still fail as a real estate professional. The make-or-break, end-all-be-all piece of every agent’s business is lead generation. Without clients, you’re without a job.
Real estate agents generate leads from a wide array of sources. An agent’s network of personal contacts or “sphere of influence” together with referrals represent the cream of the crop — those warm leads that are more likely to convert because they have some kind of already-established connection to you.
As Inman’s latest research explores, over the last decade-plus, the internet has taken the home search online and busted open the possibilities for lead gen while presenting new risks and complications. Using a variety of tools, platforms and methods, you can set up nets in any corner of the world wide web to catch browsers who might also be potential homebuyers or sellers. The digital beast divvies up contacts in bulk, but they can be cold as ice while burning a hole in your pocket and ultimately testing your resilience as an agent.
“[Online leads] take lots of time and can be quite discouraging,” said a newer Idaho Realtor, commenting on our most recent industry survey. “I call the time I spend on them as my ‘morning beatdown.’”
Over 20 percent of respondents agreed that one word of mouth referral is worth 100 or more online leads, with 16 percent equating one referral to 25 to 50 online leads.
Moreover, 30 percent of respondents said that online leads are more trouble than they are worth (45 percent disagreed, while 25 percent were not sure), yet this type of lead generation still drives some portion of sales for over 80 percent of real estate pros, according to our research.
“[Online leads] take lots of time and can be quite discouraging. I call the time I spend on them as my ‘morning beatdown,’” – Idaho agent
Indeed, online leads can work wonders for agents who take a disciplined approach to harvesting and nurturing them — as one South Carolina broker commented: “Online leads may take more effort to cultivate into transactions, but if it was easy, they wouldn’t call it work!”
Our research also showed that it’s more important now than ever to take a targeted and measured approach to digital lead capture and follow-up, as the cost of online leads over the last decade has increased while their return on investment has declined, with one Florida broker describing them as “watered-down garbage” compared to a few years ago.
Another important consideration is that online seller leads appear to be more rare than online buyer leads. We found for around three-quarters of real estate pros, the majority of online leads they’re receiving are buyers, whereas about 5 percent say the majority they receive are sellers. Ten percent said it was around 50/50.
But buyers are often sellers and vice versa, so if you can get a lead to stick with you, they may yield additional sales opportunities in the future.
Online buyer and seller leads cost roughly the same, according to previous (separate) research by Inman that estimated the average cost of each type at $5 or less.
Meanwhile it was felt that rookie agents benefited more from online leads (34 percent) than veteran agents, who are working with a stronger referral base.
All in all, what works for one agent might not work for another, but the pros believe an organic, relationship-building approach with a human touch can be key to success, as social media, particularly Facebook, rises as a golden opportunity to make connections without breaking the bank, and listing portals such as Zillow continue to be popular sources of business for the dogged, patient agent.
In some cases, an online lead can be the beginning of a beautiful relationship just as a personal referral can be.
“They came in as a lead about eight years ago,” shared a Minnesota agent. “I listed their home and since then, they have bought and sold three more homes. They have also referred me to many others which has resulted in another four closed transactions.”
Online leads by the numbers
Our survey showed that 19 percent of real estate pros are capturing 50-plus online leads (both paid and unpaid) per month; 17 percent are capturing 20 to 49 leads per month; and 14 percent are capturing 11 to 19 leads per month. A solid 20 percent are only bringing in 2-4 online leads on a monthly basis.
How much are those leads contributing to closed business? The largest chunk of respondents (27 percent) said that online leads account for less than 5 percent of closed sales. Digging in deeper, online leads made up 20 to 49 percent of business for 19 percent of respondents, with another 13 percent reporting that online leads were giving them 50-99 percent of their closed business. We found that 12 percent had never closed business from an online lead.
In a statistic that might help agents better manage expectations, we found that for nearly 30 percent of respondents, the average online lead conversion rate is 1 to 3 percent. Furthermore, 18 percent cited their conversion rate at 3.1 percent to 6 percent; for 14 percent, it was 6.1 percent to 10 percent; and only 10 percent reported a conversion rate of over 10 percent.
As a Phoenix team leader commented: “A lead is a lead. You have to work the lead to get something out of it. The issue is that you need to be a true sales person with online leads. You are on a Broadway stage performing, and if you are just there watching, stay away from online leads. They are not for everybody.”
Thirty-seven percent of respondents said that unpaid online leads were more valuable than paid, while 21 percent said the opposite, and a substantial 40 percent-plus were not sure. Meanwhile, close to 50 percent said that more than half of their online leads are paid.
Portals and social media duking it out
Where are real estate agents consistently buying online leads, and which platforms are proving to be worth the money spent? Inman’s research investigated these questions.
Respondents said that they mostly buy leads from third-party listing portals (37 percent), social media (28 percent), search-engine ads (17 percent) and “big data” lead generators such as SmartZip, Offrs and First.io (14 percent). To a lesser extent, “my broker” (8 percent), local public-facing MLS sites (6 percent) and “my franchisor” (4 percent) were also places where some real estate pros are heading.
Drilling down into these sources further, Inman inquired into which of these platforms are giving real estate pros the biggest ROI for paid leads. According to survey takers, listing portals (17 percent) and social media (14 percent) are competing at the top, with portals still edging out social for paid leads, followed by search engine ads (8 percent) and “my broker” (8 percent). Big data lead generators were cited by 5 percent of survey takers as being one of their highest sources of ROI.
In September Inman delved into a separate report from advertising research firm Borrell Associates suggesting that real estate agents and brokerages are more likely to buy ads on social media than on all other forms of digital media, including listing portals.
The results indicated that social media advertising is producing a significant return on investment for real estate agents, signaling rising costs for Facebook and LinkedIn products and stiff competition for Zillow Group and realtor.com.
“Overall, agents are spending $9 of every $10 on digital advertising, and more and more of the spending is going to Facebook and LinkedIn,” Borrell reported.
It forecasted a large migration from “pay-for-listings sites” — which is Borrell’s term for listing portals — “to more sophisticated forms of targeted digital advertising, in both display (banners) and particularly in social media.”
Curious how these platforms stacked up when it came to lead gen — specifically, paid lead generation, rather than organic — in this survey, Inman asked respondents where they were purchasing online leads, and which of a handful of leading platforms yield the biggest return on monetary investment for their business.
Respondents reported that they were more likely to buy online ads for the purpose of generating leads on social media (38 percent) versus third-party listing portals (25 percents).
The results also indicated that Facebook, which 19 percent of respondents cited as having the highest paid lead ROI, is now neck-in-neck with real estate behemoth Zillow (which led with 22 percent) in this arena. Meanwhile 15 percent of respondents ranked Zillow’s biggest listing portal competitor, realtor.com, as their highest-return source of paid leads, while LinkedIn garnered no votes at all.
“Online leads may take more effort to cultivate into transactions, but if it was easy, they wouldn’t call it work!” – South Carolina broker
Facebook, meanwhile, is leading the way for unpaid online leads, according to respondents (48 percent), followed by agents’ websites (34 percent), listing portals (17 percent) search engines (16 percent), “my broker” (15 percent) and Craigslist (10 percent).
A team leader in Houston described the ripple effect that can unfold: “I was contacted on a Facebook post I had and the buyer had a home to sell, her husband had another home to sell as well. So I got two listings and a purchase from one lead. I was also referred to three of their friends who all bought homes.”
According to this Montana agent of a few years, Zillow, realtor.com and Trulia have been “a waste of time.”
“Most of the time, they either aren’t qualified or aren’t loyal and the amount of resources it takes to change both of those is more than with other leads,” the agent commented. “Facebook and personal website leads, though, are pure gold. There is a very high rate of return on and relatively low resource expenditure on those.”
Those we surveyed also mentioned other places where they generate “the best” online leads — software products Commissions Inc., Kunversion, Follow Up Boss, Real Estate Webmasters, Zurple, AgentZip and BoomTown; along with classifieds/listings sites Craigslist, Zillow-owned Trulia, Homesnap Pro, Nextdoor and New York-based StreetEasy; were all cited, showing the wide array of sites and tools agents are leveraging to catch buyers and sellers on the web.
In addition, we asked real estate pros how they go about examining products claiming to peddle online leads before making the wrong investment.
Said this Indiana-based agent: “I ask [companies], who can I talk to across the nation in a city like mine that does [it]well? I am in Indiana. Having me talk to a top agent in Cali is not the same as talking to a smaller town Midwest agent doing big things.”
Meanwhile, a good test question for a hard-selling online lead company is: “What percentage of the nation’s top 1,000 are using the platform?”
A number of respondents also said they went to their favorite industry Facebook groups to inquire about what was working for their counterparts.
A good test question for a hard-selling online lead company is: “What percentage of the nation’s top 1,000 are using the platform?”
To get a swish, it’s all about the follow through
A clear message coming through in the comments of our survey was that instant and immediate success from internet leads is generally a pipe dream.
This Florida agent who’s been in the business for over five years voiced the frustration felt by many in the industry: “After a year of paying for ‘exclusive leads’ from realtor.com, I can say that the vast majority of the leads are bored people sitting up at night scrolling with no actual intention to look at or buy a home. Every lead I received got followed up with email and a phone call. The vast majority will never respond even after several attempts.”
But if you are willing to make multiple attempts to contact an internet lead, take a longer term view and nurture longer term inquiries, they can be worthwhile. “We had a Zillow lead come in that, over a year later, turned into a $740,000 sale and a $350,000 purchase,” said a Missouri agent.
“After a year of paying for ‘exclusive leads’ from realtor.com, I can say that the vast majority of the leads are bored people sitting up at night scrolling with no actual intention to look at or buy a home.” – Florida agent
“If you go in with right attitude, that only one in 10 will work with you and they want you to educate them, not sell them, it works out,” added a California agent.
To form any kind of relationship short term or long term, it is important to respond to that initial contact quickly, said respondents. Almost 50 percent said they responded to an online lead “momentarily,” another 33 percent within an hour and 11 percent within the day.
For those working the system with some success, their follow up strategy is a multi-pronged approach.
“I have taught myself Google AdWords, the principles of an effective landing page and Facebook Ads. I have personally generated over 4,000 online real estate leads and closed hundreds of thousands of dollars in gross commission income. It works only if you have a strong filtering, nurturing and follow up system,” said a motivated Toronto agent who is finding some success.
New York brokerage owner J. Philip Faranda, an early adopter of tech in real estate, said the best practice of responding to an online lead has gone from responding within 24 hours to 90 seconds, and that this is a natural evolution.’
The broker, who is spending $50,000 in 2018 giving his agents training on lead conversion and other areas, said there’s a whole long game to following leads that people fail to understand. Only a small group of leads are ready to buy in the next 90 days. Most home hunters begin an internet search a year or so ahead of moving.
For those agents who know what they are doing, they have a system for those ready to buy from 90 days to 12 months to still be top of mind. Those beyond 90 days, you “incubate with solid CRM,” he said.
“Within three minutes of a lead coming in, call. Then send an SMS if no answer. Then send an email if no answer. Then auto send SMSs and emails. Then call every day until they pick-up for the first 15 days.” – Phoenix broker
A long-term vision with buyers can also reap rewards down the line when they become sellers, as was the case for a Madison, Wisconsin, broker who assisted a former client in a $400,000 sale in a popular neighborhood, which enabled the broker to continue marketing to the tight-knit area.
A broker from Detroit doing well with online leads laid out his strategy: “I call, text and email within one minute of submission. If no answer, I call six times in the first hour of submission. I call each day four-plus times or until contact is made. If no contact, then I call, text and email weekly.”
Joe Samson, an associate broker and head of Joe Samson & Associates with CIR Realty in Calgary, Alberta, has written about nurturing long-term leads. He reminds agents that it’s about building relationships rather than “capturing leads.”
His approach is not forcing the consumer to do anything in the early days and simply asking a couple of key questions.
“If you force them to sign up on your website — it’s like putting bug spray on you, you are repelling them,” Samson said.
If you give them information through blogging, build up trust, show your competency level, that is a better route to take, he advised.
Following up with leads can be pleasant if you have the right systems — a CRM, a team, pay per click ads driving traffic to your website, and possibly buyer’s agents — in place.
Pick the systems that match your business and your wallet because none of these things are cheap, he warns.
An experienced Toronto agent explained a dogged method: “I call immediately, then there are automated email drip campaigns every few days slowly getting spaced out with pre-recorded video to personalize and build rapport. I text when unable to connect with a live person on phone, then auto-prospect listings that match their interests. I track their activity and how engaged they are and personalize emails according to what they look at, filter based on motivation, filter based on timeframe and use A.I. to personalize messages based on their activity.”
Moreover, a Phoenix broker provided an idea of what he’d like to see as follow up from his agents: “Within three minutes of a lead coming in, call. Then send an SMS if no answer. Then send an email if no answer. Then auto send SMSs and emails. Then call every day until they pick-up for the first 15 days. Then give to my ISAs [inside sales agents] to continue the deep long chase. I do not want my agents chasing high-hanging fruit. I want them mainly focused on responsive people.”
Respondents said that tools helping them with this type of follow-up included Lead Concierge, Zillow Concierge, LionDesk CRM autoresponders, Follow Up Boss and insidesalesagents.com, among others.
“If you force them to sign up on your website — it’s like putting bug spray on you, you are repelling them.” – Joe Samson, associate broker
Dear lead: I’m a human, too
We also asked real estate pros about their messaging strategies. When you first reach out to a lead, what should you say?
The best advice was to make your response as human as possible to set yourself apart and to get some key questions answered early on, specifically on the buyer or seller’s timing.
An Oklahoma City agent tries to allay any pressure the consumer might feel: “Hey! Just noticed you signed up on our site. Don’t worry, we aren’t going to start blowing your phone up. Just wanted to let you know there is a real human here to help if you have any questions. Shoot me a text or give me a call. Thanks!”
Another approach from a Nashville broker is worth a look: “Hello, I noticed that you stopped by our website. My name is James. My wife and I are Realtors with … We’d be delighted to help you get started on your journey toward a new home. If your home purchase timeline is arising soon, I wanted to offer you a quick phone or in-person consultation. Alternately, if your timeframe is still a ways off, I’d be happy to set up an automated listing alert for your areas of interest. If you would like to see a home, please don’t hesitate to reach out to me directly.”
A long to-do list for brokerages
If their agents are open to accepting help, brokerages can do a lot to assist in online lead generation by providing associates with a CRM to help them stay on top of leads and inform them of the types of online lead services available.
Help with “scrubbing” — or qualifying — the leads and immediately assisting incoming leads to improve capture and conversion rates were other suggestions from respondents.
“We have a (brokerage) call center that helps to qualify before meeting the agent,” a Kansas City agent reported.
A number of agents didn’t want their brokerages getting involved with their leads, such as this seasoned Illinois professional who argued: “I don’t think this is my brokerage’s job. It’s my job as a good agent to process these leads. If my brokerage does this for me, they also do it for the other 100 plus agents — then how are we different?”
On the other hand, newer agents expressed frustration working in an environment where pursuing internet leads was not encouraged.
“My broker dismisses online leads pretty much,” commented an agent in Kansas. “She says our agents should be referral-driven. That’s great for people who’ve been in the business a while, but I have to make a living until I can start getting enough referrals from previous clients and friends.”
More respondents than not agreed that rookie agents benefit more from online leads (35 percent) than veteran agents (16 percent), though 36 percent were not sure. This could be explained by the fact that veteran agents have cultivated more referrals, as the agent in Kansas suggests, and a better-developed sphere of influence.
Projecting a culture in which online lead follow up is simply part of the job would be a good incentive for agents in a brokerage, suggested a California broker. “Run a tight ship — require two hours everyday devoted only to lead generation and communication,” the broker said.
Brokerages could also be spending more money on online advertising and help with scripts, suggested others.
“Our brokerage could benefit from updating their website to be more user friendly, offer more data, and engage the people who are looking on it,” commented a Seattle broker.
Guarding against the safety risks
One downside to online leads is that they present more of a risk to agents’ safety than those who have been vetted as a referral or past client.
As a female agent in Texas said: “I take more precautions when dealing with online leads. The majority of my business is from referrals and I typically know people before I work with them. With online ‘purchased’ leads, there is no relationship prior to the business transaction.”
Around a quarter of respondents said they didn’t have safety concerns dealing with internet leads — a number were using safety apps or researching the backgrounds of leads on Google and Facebook before meeting them.
New York broker Faranda, who is also president of the Beverly Carter Foundation (founded in honor of late real estate agent Beverly Carter, who was murdered on the job) says safety is definitely a concern with internet leads, but using apps such as ShowPal and Trust Stamp (which is now free for Realtors) can allay those risks by allowing agents to plug in someone’s cell number and find out all about their identity.
Faranda and others have a policy that the lead comes to their brokerage office for a meeting first where they could take copies of their ID, check their pre-qualification credentials and connect in a safe place.
A female coach based in Wisconsin has a whole process designed to keep her safe: “I do not show my picture,” she said. “I have a male team member follow up and I have a lender pre-qualify them. I also meet them at the office or a public space.”
Moreover a Missouri agent smelt a rat with a few Zillow leads who were interested in property in a remote, rural area at least 90-120 miles from her office. She suggested they contact an agent closer to the property.
In addition to personal safety concerns, online leads can leave agents vulnerable to scams, which is why precautions such as requiring proof of pre-approval and speaking with the lead’s mortgage broker were important steps, advised a number of agents.