Imagine you’re a brand-new real estate agent. You’ve passed your test, you’ve found your brokerage and you’re ready to get down to the business of selling houses. Now answer this question: Should you spend the bulk of your time cultivating relationships with people already in your network, or should you try to cast as wide a net as possible by buying leads and referrals that don’t come with a personal connection?
- It can be more cost-effective to cultivate the contacts already in your database.
- Conversations with your sphere should focus on their lives and interests, not their homeownership plans.
- Giving above-and-beyond service will mean you have clients who don't need to be convinced you're worth it.
Now answer this question: Should you spend the bulk of your time cultivating relationships with people already in your network, or should you try to cast as wide a net as possible by buying leads and referrals that don’t come with a personal connection?
There are more than just two ways to run a real estate business, of course, but this seems to be a conundrum that many agents face on a regular basis: Should I try to get a high quantity or volume of leads — or should I focus on cultivating fewer leads, but higher-quality and more well-qualified ones?
What do consumers want from you?
“At first consumers reached out to agents because they just wanted the information — they wanted to know that 123 Elm Street is for sale and how much is it,” noted Alyssa Hellman, head coach at Bamboo Realty. “Now they can find that information so easily, but they don’t understand what that means, and they don’t understand, is that a good value still? Is that good money?”
More than anything, Hellman says, consumers are looking for an advocate. “They need somebody who’s helping them comb through everything that’s out there, somebody who’s on the consumer’s side, who they feel like is not just advocating for them but actually understands — look, if they don’t get to close in this timeframe, this is the impact it will have on their daily lives.”
And those clients become increasingly loyal to the above-and-beyond agents in red-hot markets like this one — where just about anyone could sell a house if they get the price right.
“It doesn’t take a genius to be able to sell their house, but it does take a qualified agent to be able to help them navigate that transition,” she noted.
Where do you spend that $1?
“Ten years ago, maybe — that’s when this lead generation stuff was really powerful,” said real estate coach Tim Harris. “But now it doesn’t really work. Charles Schwab is quoted as saying, ‘When the going gets tough, the best leave.’ A lot of agents should be figuring this out.”
Contactually CEO Zvi Band described the lead trend in real estate as a “pendulum swinging back and forth, year over year, decade over decade,” and it swings between two questions that agents ask themselves:
- Do I focus on my database first?
- Do I focus on buying new leads or prospecting first?
“I think we’ve seen in the past few years this heavy, heavy focus on lead gen,” he said. And he thinks the pendulum has already started swinging in the other direction for the top agents, who are focusing on their sphere of influence first.
“It’s not choosing one or the other — it’s a matter of what you do first,” Band explained. “If you have $1 in your hand right now, do you spend that buying a new lead or buying a one-year anniversary gift for someone you sold a home to a year ago?”
Consultant Valerie Garcia notes that for both real estate agents and brokers, it’s often more cost-effective to, as she puts it, “love the one you’re with” instead of chase after new business.
“We say this in business: It’s cheaper to keep an employee than hire a new one,” she noted, and when an agent is focused on constantly filling their pipelines with brand new people, they’re essentially trying to hire new employees. “We’ve got millions of agents who aren’t nurturing the business they already have,” she explained.
Starting with conversation
Someone who’s “truly part of your sphere” already knows what you do for a living, Hellman argues. “They don’t need you to constantly send them a newsletter about it. What they want is somebody who gets to know them and their lifestyle. If it’s somebody who’s getting divorced, they want somebody who knows that they’re going through that.”
To understand these things about clients, agents are going to need to start using what Hellman calls “the old-school method of getting face-to-face with people and taking them to lunch or coffee and having a conversation about their day, about how work was.”
When an agent treats their sphere differently than he or she treats a lead — asking different questions that blossom into completely different conversations — opportunities are lost. Hellman says it’s better to talk to a stranger about the fact that she’s traveling to see all of the Major League Baseball parks with her son than ask them how many bedrooms or bathrooms are in the ideal home. “You need to be having conversations with people because picking up the phone and telling them what new house is on the market isn’t information they want,” she explained.
And an agent can learn to be a good conversationalist, she believes. She suggests that agents who feel awkward ask their prospects questions, or share a fact about themselves and then follow up with a question. (Her example: “I love craft beer — do you go anywhere else around here that has good craft beer?”)
“So many agents are so laser-focused on the house that they’re not thinking about all of those other factors that are going to impact their clients’ ability to rent, buy or sell,” Hellman noted. “If you don’t lead with that stuff — that’s how you start putting out fires all day, every day.”
The white-glove, red-carpet approach
When you understand your clients, you can figure out what will delight them, the small touches that mean more than you might think.
Audie Chamberlain, founder of Lion & Orb, cites star real estate agent Madison Hildebrand as an example. “When Madison closes on a home, he doesn’t say to the person buying the property, ‘Well, enjoy your home.’ He’s got his team calling the electric company, calling the cable company, getting everything truly turnkey for a person — and there is no check, that’s not done for a bonus, that’s not done for any sort of compensation other than wowing that client because that client is also a very successful person, and they’re putting their name on the line when they make a recommendation or a referral.”
It pays for agents to invest in what Chamberlain calls “over-the-top love” because that’s the investment that nets the referrals and recommendations.
“Are you going to put your neck out there for an agent like the one who sold my condo, who did the bare minimum and just sort of checked the boxes and moved on, or the person who literally had everything turned on at your house and showed up with a tree?” Chamberlain asked.
“That’s what generates more listing appointments, that’s what generates more referrals, that’s what generates the next deal from that same client — all of that is coming from taking that white-glove, red-carpet approach for people.”
You don’t need to be a celebrity agent selling million-dollar properties in Malibu to make this work, he adds. He knows another agent — Mor Zucker in Denver — who’s a newer agent focusing on the details.
“She was always thinking of little extras and things she can do just to wow, and that’s built up the referral business faster than someone who’s been in business on average the same amount of time,” Chamberlain said. “One of the things that she shares with me that she does is going above and beyond to make the place look amazing — she brings in cleaning crews and she does that same approach of black-car service. Even though she might not have the experience or the budget, she’s still using the same mindset.”
The lead life cycle
Agents who are relying on internet leads should be operating under the assumption that any leads they receive probably aren’t immediately ready to buy, noted Band.
“Maybe they’ll go out on a tour with you in the next week or so, but more likely they’re either at the very beginning of the process — they just found out their wife was expecting a second kid or something like that and they need to start thinking about a bigger space, or maybe they’re looking at a job in a bigger city — or maybe they are deep into the process with another agent and they just want an answer about that property. You have to take the long-term view,” he said.
He mentions Chris Fralic, a venture capitalist (and Contactually client) who was recently featured in a Quartz piece about how to become “insanely well-connected.”
“Chris Fralic is obsessed with taking notes,” Band noted. “A good agent wants to remember their client’s dog’s name. I want to remember that you have a three-year-old and what ZIP code you’re looking for properties.”
Many agents don’t have any system at all for managing their networks, argues Garcia. “If you were going to ask a room full of agents, ‘Who uses a standardized system for managing the people you already know?’ about two people raise their hand,” she contended.
“They have a database — that just means they know people,” she added, but a system that keeps track of and categorizes your network is a different animal.
“You don’t need to send your grandma stuff about first-time homebuying,” she pointed out.
Why being of service is the best lead-generation program
“In my experience success is very much tied to helping other people,” said Chamberlain.
“All of us are designed to be of service to other people and get our greatest feeling of pleasure out of helping people,” noted Harris.
And he thinks there’s something special that happens when agents approach prospects and clients with the foremost thought in their mind, “how can I be of service to this person?”
“If I’m focused on you, I can’t focus on myself and have an ego-based thought in my head at the same time,” he said.
Garcia says that smart segmenting can help agents reach their clients with the right information at the right time. “It’s the thing we teach people not to do in their heads, which is stereotype and profile people, but we should be doing that with our clients on a regular basis,” she said.
What she means is this: For example, right now, Canada is seeing a boom in first-time homebuyers who are single women in their 30s and 40s. What might those women want to know about buying or selling, or about their potential new neighborhood?
“Maybe women in their mid-30s to early 40s don’t necessarily want a fixer-upper,” Garcia expanded. “Maybe they want to be in an area where they can exercise or run outside or get to work and be safe; maybe they want covered parking; maybe they’re not sure about what it would take to save up for a down payment. So I’m going to start sending them information from financial advisors about how you get your finances together so you can buy alone, and things you can do in the neighborhood that are fun and safe.”
That might seem like stereotyping, she acknowledged, “but at the same time you’re now targeting information to that segment of people that meets their needs, their fears, their frustrations and their questions. When you do that, they’re going to think ‘this means something to me.’ If that woman was only getting stuff from you about downsizing or it’s the best time to buy or sell now, she’s not going to have the same emotional appeal to it.”
From passive to active
Harris posits that marketing via Facebook and other passive methods of prospecting are popular “because most agents are paralyzed with fear about having any direct sales conversations. They don’t want to pick up the phone and talk with someone who might have an adversarial attitude.”
But instead of worrying about how those prospects might react — psyching yourself up about what you’ll do if they yell, for example — “if you approach every interaction with the idea that you’re there to help this person, you’ll reach different heights,” Harris said.
Deciding who you serve and how is also important, Garcia believes. “I think trying to be everything to everybody is way harder, because then you end up with people who do not have great expectations of the service you want to provide.”
So agents who think that segmenting and targeting specific clients is hard work or a waste of time should reconsider that attitude, she says. “You already have fostered relationships and know what these people like and need and want — why wouldn’t you put the effort into that?”
Chamberlain cites agent Ben Bacal, who became known in the affluent Trousdale area of Los Angeles by door-knocking with service.
“People who are new to the business think of that as door-to-door sales and they think about that as scary,” he said. “But you talk to Ben Bacal and how he’s now the king of Trousdale — that came from him literally door-knocking with data in hand and saying ‘Hi Mrs. Homeowner, did you know that since you bought this home the price per square foot in this neighborhood has gone from $100 to $3,000? Let that sink in. Did you know that with this view and this property, I could probably get you $20 million for this house you bought for $300,000 back in the day?’
“That’s how he built his empire, through door-knocking — but who has that kind of hustle?” Chamberlain added. “How many are willing to roll up their sleeves and go knock on a stranger’s door just to talk about it? How about spending a day talking to 20 homeowners in your market and having conversations with them and showing that kind of hustle?”
And maybe you can’t knock on that door or pick up the phone personally — but you can still be thoughtful about how you keep in touch with your base, says Hellman.
She can remember one thank-you note she’s received by heart. It was sent by Bend, Oregon, agent Greg Fischer; actually, to be perfectly accurate, Fischer paid his mother to write and send the thank-you note, which was acknowledged in the note and which Hellman found delightful. (After all, she memorized it!)
“Agents are trying to put on this face like, ‘I’ve got it all together, I can do it all,’ and it’s failing miserably,” she said. “But it’s super genuine to be like ‘I wanted to say thank you and I don’t have enough time to do that in a timely manner so I’m paying my mom to write some notes.’ Figuring out how to systemize your business and scale it in a way that still is genuine and not automated is so important.”