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Why Real Estate Leads Work

Posted Sunday, January 4, 2009

One of the most often asked questions from real estate agents I consult is how can I grow my business to the next level. The real estate agents who are asking me this question are educated, experienced realtors who have paid a hefty price for my time and who already close many houses each month.

Almost all of them already understand the 80 percent, 20 percent rule and are having someone else do almost every thing in their business except generating real estate leads and showing up to closings.

When you look at the sales cycle that a real estate agent and home buyer or seller go through it is very strain forward. The real estate agent is contacted or contacts the prospective client, they have a sit down meeting to discuss goals of the transaction and this is when it happens. One the potential client has meet with the real estate agent, the agent almost always gets an agreement signed stating the client is being represented by the agent.

So, to produce more sit down meetings with prospective clients all an agent has to do is get more real estate leads or potential clients. This is where real estate leads come into the business cycle. More leads means more potential clients to sit down with and help through the buying or selling process.

There are many ways for realtors and real estate brokers to generate their own real estate leads, but this goes against the 80 percent, 20 percent rule. The obvious answer is to find a reputable real estate lead generate company to send a consistent number of motivated real estate leads to your or your company.

Notice the word motivated in my sentence. Many real estate lead generation companies do not target motivated home sellers or buyers and they sell these leads to realtors who then waste time talking with non motivated clients. You need to make sure the lead generate company you are dealing with is generating motivated home buyer or seller leads, meaning they are looking for someone who help them now and are willing to talk with a professional real estate person.

There are many real estate lead generation companies, and each company has their own business plan or lead generation method and sale system. My suggestion is to ask the company where and how their leads are generated so you feel comfortable the real estate leads you will be receiving are motivated home buyers or sellers.

Then ask what the conversion rate is for the companies leads. A good lead generation company will have around a 20 percent conversion rate. Meaning two out of every ten leads will end up listed or a buyer representation agreement will be signed signed.

One you have a conversion rate and the cost the company charges for each lead you can come up with a budget for your leads. One suggestion I would make is to insist there is no cancellation fee for their service. The is to protect you from the no so generous and honest companies that exist in this market.

Real estate leads are by far the best way to grow your business to the next level. You increase the number of clients you work with. This also allows you to increase your network of new clients. Ask the leads if they have any family or friends who need a professional real estate agent to help them in their next home search or sale.