Beyond the pros and cons, there is a bigger picture to consider when deciding whether paying for real estate leads is worth it
The best lead generation system for Realtors® is the one that works for you. Some agents find great success with organic strategies, such as door knocking and blogging. Conversely, others rely on buying leads on Zillow, Realtor.com, and other third-party marketplace platforms.
There are some fitting reasons why an agent might buy real estate leads:
- You get instant business opportunities. One of the most significant advantages of buying leads is the immediate access it gives you to potential clients. It can save you the time and effort required to generate leads from scratch.
- Newer agents can get a faster start. If you’re a novice agent, you face a steep learning curve. Buying leads can help you get started faster, gain experience, and build your portfolio while you learn the ropes of the industry.
- There is a predictable cost. When you buy leads, you have a generally clear idea of the cost per lead, making it easier to budget and manage your marketing expenses.
- It diversifies your lead sources. You can purchase real estate leads to complement your other lead generation strategies, allowing you to diversify your client base and expand your reach.
Still, just as there are pros to buying real estate leads, there are also cons:
- The cost of purchased leads is high, and it’s getting higher. For many agents, the steeply rising monetary cost of buying leads makes this particular strategy unsustainable. You should also consider the value of your time; converting purchased real estate leads into bona fide clients requires a tremendous amount of persistent follow-up.
- The quality of purchased leads can be inconsistent: Agents pay for leads up front, which leaves providers with little incentive to vet the names they sell. This lack of investigation means the leads you purchase may be outdated, unqualified, or unresponsive, culminating in wasted time and resources.
- Purchased leads may not be exclusive to you: Lead providers often make the same leads available to multiple agents, making it harder to stand out and build a unique connection with potential clients.
- You’re competing with other agents: With other agents purchasing the same leads, competition is intensified, and conversion rates drop. This is especially true in markets that are saturated with licensed agents.
But beyond these lists of reasons for and against buying real estate leads, there is a bigger picture to consider.
Marketing in the digital age
New and experienced agents alike should contemplate the dramatic impact the internet and digital marketing have had on consumer behavior and expectations—and the subsequent implications for their marketing strategies in 2024 and beyond.
With the internet, homebuyers and sellers have unprecedented access to tools and information that make it possible for them to find properties and transact deals with minimal or no assistance from an agent. In fact, NAR reports that in 2022, 51% of all buyers found the home they purchased online. Furthermore, 10% of all home sales were FSBOs, up from 7% the previous year.
Even if a potential buyer or seller is looking to hire an agent—and the majority still are—social media has transformed that process too.
Perhaps more than ever before, homebuyers and sellers are looking to hire agents who they know, like, and trust, and they’re turning to social media to look for agents who fit the bill. Consequently, many top agents are using social media to build and enhance all aspects of their brand. Their end game, whether it’s through the use of social media or other means like the ones I discuss below, is to build and nurture relationships with their audiences.
Where do Realtors® get most of their leads?
According to NAR’s 2023 Member Profile, the “typical” Realtor® earned 27% of their business from repeat clients with an additional 24% coming through referrals from past clients. Obviously, some agents have enjoyed more repeat and referral business while others have experienced less, but these numbers suggest that it’s wholly possible for an agent to get more than half of their business from relationships they already have.
Other statistics bear this out.
The 2023 NAR Home Buyers and Sellers Generational Trends Report indicates that 50% of buyers either found their agent through a referral from a friend, neighbor, or family member or used one they had hired previously. An examination of sellers tells a similar story—63% hired their agent on the basis of a referral or used the same one they had worked with in the past. (This number jumped to 76% for older millennials.)
As an agent, you always want to have a healthy mix of lead sources, but these numbers suggest that a significant portion of your business should be coming from clients and the people in your sphere. Certainly, experienced agents should be investing in marketing that strengthens their connections with the clients they have already gathered.
But what about new agents?
While buying leads may get you a swifter entry into the arena, be aware the average conversion rate of purchased leads is disappointing. And once you’ve exhausted your list of bought leads, you’re back to square one. In the long run, focusing on building relationships and nurturing leads from various sources is a more sustainable and profitable strategy for your real estate career.
Relationship marketing: the smart agent’s best strategy for generating leads
Relationship marketing refers to a strategy of cultivating sincere, long-lasting relationships with clients and others in your sphere of influence. It’s not an approach focused on the next quick transaction; rather, it requires commitment to the long game, emphasizing client satisfaction and retention with an eye on providing lifetime value.
While relationship marketing is not a tactic unique to the real estate industry, it’s one especially well suited to meeting the needs of agents. Relationship marketing effectively allows you to:
- Create a personal brand. It’s through the relationships you form with the people and businesses in your community that you establish your personal brand and expertise in your local market, making you a trusted and go-to agent.
- Build trust and credibility. The only way your audience will develop trust in you and your expertise is if they get to know you. Consistently reaching out and connecting with your audience in a variety of meaningful ways will not only make you a familiar face but also encourage them to choose you for their real estate needs and recommend you to others.
- Be remembered. Different sources will tout different numbers depending on how they slice the pie, but roughly speaking, Americans live in the same home for 10–13 years. If you don’t maintain relationships with your clients during the intervening years, it’s likely that another agent’s “For Sale” sign will end up on the lawns of houses you first sold.
How to implement relationship marketing
There is a long list of ways you can employ a relationship marketing strategy in your real estate business, but in all cases, you want to ensure that you’re providing value to your audience. In addition, and we emphasize this with all our clients, you must be consistent. You cannot expect to develop sincere relationships with people if you only show up once or twice a year.
First and foremost, you want to provide exceptional service. Find ways to go above and beyond for your clients. Not only will you satisfy them, but you’ll also encourage them to refer you to family, friends, colleagues, and others in their social circles.
Beyond this basic foundation, there is a myriad of additional ideas you might consider. Here are just a few.
Post on social media
As mentioned earlier, agents are finding their audiences and professional success by maintaining a stable presence on their social media platforms, and the reasons this works are many. By posting a variety of personal and entertaining information, you allow prospective clients to know and like you. Including useful, expert information about real estate builds your credibility. And showcasing your successful deals inspires trust and confidence. Just avoid being one-sided in your posts—be sure to like and comment on what others post too.
Many agents strive to be consistent when promoting themselves on social media, but there’s no denying that it’s a time-consuming activity. We help our clients maintain a steady presence by providing personally branded, fully automated Branded Posts—one of four tools included in our Digital Marketing Platform. Clients choose from dozens of different subject categories and set a schedule, and then we select from our vast library of articles, memes, recipes, and more to publish seasonally appropriate, personally branded content on their platforms.
Engage in networking
There are ample opportunities out there to meet and network with others. You especially want to connect with business owners who share your same client base but don’t compete with you so you may promote each other’s services. Download this free referral partner worksheet to help organize and track these relationships.
Offer expert insights
Share your industry knowledge through seminars, webinars, or newsletters to position yourself as the go-to expert in your niche. The face-to-face, real-time interaction you get with people who have identified themselves as warm leads makes hosting a real estate seminar a no-brainer. Another of my blogs lays out all the essential steps to create a successful seminar, plus offers a list of popular topics that consistently draw an audience.
Send handwritten notes
Few things make a personal connection and help to strengthen a relationship quite as well as a handwritten note.
When someone receives a handwritten note, they invariably smile and feel special because someone has cared enough to devote time just to them. Commit to sending a note to five people each day for the next five days, and you’ll have left a lasting, positive impression on 25 people who’ll appreciate your kindness and reciprocate with a referral the next time the opportunity arrives.
So many of our clients know they should be calling their spheres, but they feel awkward because they don’t know what to say and don’t want to appear self-serving. We solve that problem by providing them with a pressure-free, organic reason to reach out and have a conversation.
Our clients stay top of mind and in touch with their audiences by sending their own personally branded magazine to their most valuable contacts and then following up once it’s been received. As engaging and beautiful as these magazines are, and as much as people love and look forward to receiving them, it’s the ease with which they make reaching out to recipients so appealing to our clients.
We coach agents to call their recipients the week the magazines arrive to ask if they’ve received it and whether they enjoy getting it. Then it’s just a matter of using the magazine’s content to initiate a short conversation, which we suggest they always end by reminding their clients that they appreciate them and that they’re always available to help.
Host client events
Time and again, the top-performing agents we interview on our Stay Paid podcast tell us that they’re hosting client events to build relationships and attract new leads. For them, it’s a way to give back without the expectation of anything in return. Even so, the feelings of reciprocity that these occasions inevitably create will drive more new and repeat business, which makes investing in one or two affairs a year good business sense.
Is it worth buying real estate leads?
Whether to buy real estate leads is a decision that you’ll need to answer for yourself. You may find that the cost of Zillow Premier Agent or buying leads from Realtor.com is worth it to you. But the evidence suggests that it’s not a sustainable, long-term strategy for success.
Eventually, every real estate agent comes to understand that relationships are their most valuable assets, and the sooner you can begin to build and nurture yours, the better. Even for new agents—like Garrett Maroon, who started his real estate career with only 40 people in his database—it’s possible to build a 100% referral-based real estate business. (He explains how he did it in his webinar.) Still, to develop a business on a foundation of relationships requires a sincere commitment and desire to serve people.
At ReminderMedia, we’re relationship marketing experts with the products and know-how to assist our clients in generating more repeat and referral business. We routinely help new agents present a serious, professional image and confidently promote their brands, while experienced agents use us to stay top of mind and nurture relationships. Both enjoy the worry-free convenience of automated digital and print marketing that makes remaining consistent in front of their clients and target audiences easy.
Take a moment now to request a free copy of the personally branded magazine that has set the standard for quality in print advertising for agents.