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Takeaways:
- If the average lead costs $20, and 1/20th of leads convert, you’re paying $400 for each qualified buyer lead.
- Several ways to generate leads.
- Buying leads is expensive and it’s a habit you’re better off breaking.
Are you one of the tens of thousands of agents out there buying leads? Sure, it might seem like an “easy” way to acquire business, but the truth is that they’re expensive, buying them is a gamble, and they’re ultimately a habit you’re better off breaking.
After all, they cost an average of $20 each, and because only one-twentieth of them convert, it means that you’re paying more than $400 for each qualified buyer lead.
That’s a sizable chunk of your commission, and because your commission arrives weeks or months after the sale, it also means that you’re fronting a lot of cash to literally “buy your business” in the hopes that you make enough back to afford your investment in those leads.
For some agents, it means taking on debt to pay for lead generation, which is a pretty scary form of financial gambling.
Who wants to live like that? It’s your career we’re talking about — not a weekend with a one-armed bandit in Las Vegas — and the stakes involve your family income.
Buying leads introduces a crazy amount of uncertainty into your business processes because it makes your income dependent on how many questionable leads you can afford to buy.
And in the long term, it’s a recipe for hypertension at the very least. If you have a string of bad luck, it means being out of business entirely because you can’t afford to stay in it.
There is a better way, and I recently did a series of shows on it with Julie on our radio program, “Real Estate Coaching Radio.” We named it the “12 step recovery plan to break your dependence on buying leads” — but that’s only a slightly tongue-in-cheek show title because buying leads is basically gambling.
It’s also a gamble you don’t have to take. After all, buyer leads have been popular for only a couple of years, and from the many interviews with top producers we’ve done online, we’ve found that successful agents do not buy their leads.
They generate those leads themselves.
12 Step Recovery Plan To Break Your Dependence on Buying Leads (Part 1)
12 Step Recovery Plan To Break Your Dependence on Buying Leads (Part 2)
So it’s time for an intervention. Follow the 12 steps below to break that cycle of addiction and get your life back:
1. Admit you have a problem
If you’re paying for leads, you lack the skill to create business on your own. If you have the skill but aren’t using it, you’re being lazy.
Lazy costs you money and creates further dependence as your skills slacken. This means the leads you do get from buying them or anywhere else are less likely to convert because you’re allowing yourself to be complacent.
2. You have the power to create your own leads — for free or inexpensively
Embrace this fact. There are real estate leads everywhere, but agents who hide out and are secretive never know this. Start to kick your lead-buying addiction by embracing the fact that you are a salesperson.
You are here to help people buy and sell property. Wear your name tag. Talk about real estate everywhere you go.
3. Correct any lead follow-up issues before you spend one red cent on leads of any sort
Are you following up with urgency, scripts and setting appointments? Track your leads. Every single time we teach this, everyone has the same reaction: I can’t believe how many leads I have that I just didn’t follow up on.
Most commonly ignored opportunities:
- Sign calls.
- Open house leads.
- Internet leads from your site or your broker’s.
- Referrals.
- Center of influence.
- Stuff you’ve been paying for for years and lost track of, especially online sources.
- 1800HomeHotline leads.
4. Implement the obvious lead sources and systematize them immediately
- 1800HomeHotline.com ($37 per month).
- Open houses on your listings or borrowed listings.
- www.AgentMachine.com (referral fee only).
- www.AgentPronto.com (referral fee only).
- Dave Ramsey ELP program (Endorsed Local Provider).
5. Commit to and embrace free prospecting opportunities
After implementing the above, commit to and embrace the free, contact-oriented but easy prospecting opportunities. Identify five groups or clubs that you will participate in and contribute to.
Be yourself first, and be yourself as a real estate professional second. Wear your name tag. Mix up the combination of events and attend regularly.
- Business networks: Business Network International (BNI).
- Toastmasters.org (great to learn to be better at presenting and speaking publicly).
- BusinessNetworkAfterWork.com (in some areas).
- Women’s Networks Women Entrepreneurs/Hispanic/Gay/Over 55/specialized groups.
- Nonbusiness networks: Use MeetUp.com to find your interests.
- Volunteer work for the arts, animal shelters, sports, kids at risk, etc.
- Red Cross blood drives.
6. Network with top listing agents
Network with top agents (if that’s not you), especially ones with lots of listings and no buyer’s agents. Become their referral agent without having to be on a team.
7. Use your buyers as the excuse to prospect for listings
What we’re saying here is that you don’t want to focus exclusively on buyers or listings, but learn how to leverage your interactions with both to generate more leads.
8. Know your new construction and embrace builder business
Use your local weekend paper to identify small and medium builders. Use your prelisting package — tailored for builder business. Do a targeted expired search for “year built” and the area only, to find expired projects and spec homes.
9. Hold a buyer’s seminar
You could co-host with your favorite lender and discuss the impact of lower rates and the best types of mortgages. Require attendees to sign in with name and number, so you can follow up.
Be able to do a desktop prequalification at the event with your lender. Remember, some of those buyers also will have homes to sell.
10. Be more versatile
Learn to view all of your daily interactions as lead generation opportunities. Remember, “secret agents have skinny kids” — so don’t hide the fact that you’re a real estate agent.
Stuck in line at Starbucks? Use that opportunity to make some new acquaintances, and generate some new leads at the same time.
Real estate agents tend to be outgoing, gregarious “people persons,” so use that to your advantage whenever you’re out in the community meeting new people.
11. Become a listing agent
Lead generation becomes a lot easier once you become a listing agent because suddenly you have your listings acting as a magnet to bring people to you with an interest in buying real estate.
If you’re not listing homes, you’re working only half the equation, so make a commitment to becoming a listing agent.
The collective wisdom in real estate is “list to last” for a reason. The listing agents make the money to stay and succeed in real estate, whereas buyer’s agents are typically just hanging on trying to survive.
12. Request a consultation with a coach
Coaches provide agents to help you identify your existing strengths and the areas that you can improve in, so give serious consideration to requesting a coaching consult.
Tim and Julie Harris have over 20 years’ experience in real estate. Learn more about their real estate coaching and training programs at timandjulieharris.com, or tune in to Real Estate Coaching Radio every weekday at realestatecoachingradio.com.