Are Realtors overpaying for leads?

Oct 31, 2022

A lead generation tool is a software technology that helps realtors and property managers find new customer opportunities. Potential renters/ homeowners are generally referred to as leads because they have shown interest in renting or buying a house. Salespersons at the company will then follow up with “leads” to gauge interest levels. This is known as lead qualification. The more information the agent has about the lead, the better they can assist them and understand how much time to spend. If the client is only casually looking, agents will realize not to waste too much time trying to reach out to them. In case the client is strongly considering making a purchase or signing a lease agreement, the agent will spend more time and energy on closing a deal quickly.

Some of the biggest issues for realtors are identifying, capturing, organizing, and paying for qualified leads. Given that the real estate industry is technologically scarce, realtors still rely on traditional methods of lead generation. This includes door-knocking, cold calling, direct mail, and referrals from past clients, even though these are underutilized. By understanding the nature of the job, it’s generally assumed that agents are lazy and must do a lot of grunt work to close a deal. Therefore, effectively gaining results from the lead generation methods above can take anywhere from a couple of weeks to months to convert a lead.

The average rental agent will make 50% of the first month’s rent on a property they find a lease for. The average rent in America is $1,326 a month. This means that realtors will make $650 for every lead converted. The average salary of a realtor in Massachusetts is $48,000/year which means that full-time agents must convert 73 leads a year to stay on par with the average. With average lead costs between $40 — $200, real estate firms are overpaying lead generators such as Zillow and Redfin to attain qualified leads.

At the end of the day, leads play an important role in generating revenue for both brokerage firms and property management companies. This is why they are willing to pay a high price per lead, but what if there was a new way of generating leads? What if Agents didn’t have to pay so much?

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