Let’s Talk About Leads

As we talk to more and more agents, we notice a consistent line of questioning we have come to count on during every conversation: What About Leads? How many leads can I expect from the brokerage? How do you pass leads to agents? Leads, leads, leads? We typically turn this question back around on agents: How many deals have you closed over the past 12 months that were given to you from your Broker? How much time do you spend chasing online leads? What’s your success rate converting an online lead into a closing? Not surprisingly to us and somewhat enlightening to the agent, their answer is always quite low on the conversion rate and quite high on the time spent/wasted chasing so called leads (we are yet to hear more than 5 closings in the past 12 months came from their broker or online).

So let’s level the playing field and talk about leads, and specifically what I like to call “Phantom Leads”…

Like most industries, technology has firmly rooted itself into the real estate space and although there are many wonderful tech offerings, which result in very tangible benefits for both agents and clients alike, there are also emerging trends that are less favorable and have the likelihood of costing agents both time and money.

I know that we all have tried our best to forget that not too long ago the housing bubble burst. Fortunately and for a variety of reasons, we have seen recovery. There has been slow, steady growth in the number of existing home sales that have occurred in the US over the past ten years and a sharp reduction in the overall volume of foreclosures. In 2008, there were approximately 4.1M real estate sales in the US and in 2018 there was just north of one million more homes sales compared to 2008 (roughly 5.3M transactions). This data supports a 23% increase in existing home sales from 2008 through the end of 2018.

During the same 10-year period that we have experienced existing home sales trend upward, we have also experienced a tech revolution in real estate. Technology has been overwhelmingly good, providing efficiencies, transparency, education, enhanced communication, and a variety of other aides. The evolution of the smartphone alone has created competence, reliability, and unprecedented swiftness in the real estate space. These technologies also have the ability, if we are not very careful, to replace the most important ingredient of real estate – service. This may sound counter-intuitive because most of the technologies position their value proposition as an agent enhancement and I feel that overwhelmingly agents agree. However, tech solutions can be a slippery slope, and in my opinion, supplant agent engagement, client retention, and create bad habits like laziness and technology dependencies.

One area where technology has reared its ugly head is in the lead-gen arena. I know that agents will always have to balance new lead generation with servicing current and existing client’s needs, but at what (or) whose expense? There are very prominent websites that claim that they get in excess of 88 million visitors monthly. Taking this statistic literally and comparing it to the population of the United States, which is currently around 330 million people, these claims would support that essentially 100% of the US population; meaning every man, woman, and child is visiting their website each quarter. And please note many websites make similar claims.

I hope that by now, we all know… or at least understand their game. These companies capture some very basic information from visitors (cookies) and then utilize this biased data to sell lead generation resources to less sophisticated agents. These companies make millions of dollars selling phantom leads, which many agents and brokerages alike see as a tool for attempting to attract or obtain new clients. The question is; does this really work, and do these leads really exist?

In some instances, online leads do materialize and not every lead-gen tool is bad. But let’s consider where the majority of leads will come from. Very fortunately, the National Association of Realtors has tracked “Buyer and Seller Lead Generational Trends” since 2013 so you can come to your own conclusions with factual data. What’s remarkable in their study is that the overwhelming source for all real estate leads comes from referrals and repeat business, not online leads.

Buyers from the Internet
2013 = 11%
2014 = 9%
2015 = 10%
2016 = 10%
2017 = 9%
2018 = 9%

Buyers from Social Media
2013 = N/A no tracking available
2014 = N/A no tracking available
2015 = <1%
2016 = <1%
2017 = 1%

Buyers from Referral/Repeat Business
2013 = 59%
2014 = 62%
2015 = 60%
2016 = 61%
2017 = 61%
2018 = 60%

Sellers from the Internet
2013 = 3%
2014 = 4%
2015 = 4%
2016 = 4%
2017 = 4%
2018 = 5%

Sellers from Social Media
2013 = N/A no tracking available
2014 = N/A no tracking available
2015 = <1%
2016 = <1%
2017 = <1%
2018 = <1%

Sellers from Referral/Repeat Business
2013 = 69%
2014 = 71%
2015 = 67%
2016 = 73%
2017 = 70%
2018 = 69%

Online leads accounted for only 9% of all buyer business in 2018 and an even lower percentage for sellers at 3%. Conversely, referral and repeat business generated 60% of new buyer opportunities in 2018, and 69% for sellers. Given this information, where does it make the most sense to dedicate time and money? The obvious answer is stop chasing phantom leads, they are costly, impacting your time and your bank account. Given the information, time spent with your sphere of influence “real people” and not phantom leads is sustainable, predictable, and creates successful results.

I Heart Real Estate is dedicated to agent success. Our mission is to provide real estate professionals an unsurpassed agent-centric brokerage environment that embraces individuality and encourages creativity, autonomy, and competition utilizing the most effective technology solutions available while enriching the lives of home buyers and sellers. Let technology enhance your business, better serve your clients, and streamline the home buying and selling experience. And be very careful not to let technology diminish your relevancy as a real estate professional.