I've Changed My Mind... Some Agents SHOULD Buy Leads

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I've Changed My Mind... Some Agents SHOULD Buy Leads

I have seen a number of posts on ActiveRain about buying leads. Each time it comes up as a topic and a conversation begins there is a divided opinion about whether this is a good practice or not.

I have to admit, I had never given it much serious thought until recently. My gut reaction always said that, based on my conversations with agent who had purchased leads, many services selling them fail to deliver. I also hate the idea of a cash outlay with no guarantee of a return on that investment.

Then, a couple of weeks ago, a colleague mentioned that he was thinking of buying pre-qualified buyer leads. He has had a difficult number of months struggling to capture new business and was even considering leaving real estate all together.

We discussed his business plan in great detail and I questioned him about his willingness to pay a percentage of his income for leads that he has managed to generate for himself in the past. He confided in me that despite several years in real estate, prospecting for new business was just not something he was ever terribly good at. His believes that his several successful years in real estate were as much attributable to luck as they were to any lead generation talent he might possess.

My colleague put it all in perspective for me when he said "Steve, in this business it's important for each of us to know our strengths and our weaknesses, because when we know both and are truthful with ourselves about them we can create a business plan which emphasizes those strengths and compensates for the weaknesses." As he saw it, paying for leads (he found a company that came recommended to him by another agent he knows) was compensating for what he considers to be a weakness.

That put things in an entirely different perspective. Suddenly it wasn't all about cash outlay or doing something an agent can do for themselves. It was about self realization and smart business strategizing. I know agents who hire assistants to help manage their offices and transactions. I have a buyers representative who works with my buyers so that I can focus on my strengths including lead generation and working with sellers on short sales.

So, I've had a change of heart... for an agent, whose strength is not lead generation, buying prequalified leads may just be a very smart business decision. When we focus on our strengths it usually leads to even greater successes!

Posted by Steve Shatsky - Dallas Real Estate & Short Sale Specialist (214)213-0340 on 01/03/2010 11:48 PM

Comments (190)

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190 Comments on I've Changed My Mind... Some Agents SHOULD Buy Leads

JAN

2010

Steve,

Not sure about buying leads, i tried before and they didn't pan out buy still cost me the money!

-David

Although I have had a negative experience with buying leads, I can understand your colleague's perspective. We need to highlight our strengths and focus on them, while finding a way to accomodate or strengthen our weaknesses to make our business plans work for us as individual agents. Great thoughts!

Oh no, the dreaded lead purchase! I haven't bought any because I've not found anyone who will accept my terms.

Yeah it is tough, I have only tried one company and it didn't turn out anything, but I ahve heard of others who do well, but the cash outlay was pretty big.

JAN

2010

Hi Steve,

Thank you for sharing an informative and helpful blog. Happy New Year!

You're right Steve - very much on the Same wavelength! :-)

Steve, Years ago I remember buying lists which were broken down into demographics. I was working with another hearing aid dispenser and we looked for people over the age of 65 in the neighborhood we were working.

I did mailings from the list....which resulted in sales. From those people we got referrals! Looking back it was one of the best decisions we had ever made!

If you'll buy it, they will sell it! I'm against it. I'm also against paying realtor.com for anything.... and I don't think I should have to buy "Neighborhoods" either!

Steve, I know it doesn't work for some agents...or they have an adversion to it.

I use Google Ad words and have for YEARS.

It works and I am happy to do it. My ROI is amazing and that is where most of my business, (closings) come from.

I purchased leads when I was new to the business. It didn't help a bit!!! If you don't know what you are doing it is a waist of money. Who knows if it would be worth it to me now?

Hi Steve, I agree that in principle buying leads is no different from hiring a specialist to do any other specific task for you. But I've met very few people in any business I've been involved in that has found a reliable source for useful and fruitful leads. This area is rife with scam artists.

As Missy points out, Google Adwords may be an exception. A few years back I built an entire business - in a completely different field - off leads generated by Google Adwords. But it takes experience and a lot of experimentation to make Adwords work for you. In our case, when circumstances changed Adwords became less cost effective, leads dried up and so did the business.

Well I do not like the majority fo the companies out there the only service most provide is an ability to deposit your $$. But the theory is ok and IF you can find a company that works go for it... but that is a really big IF!

Steve- I've used several lead services and haven't had consistent results. I agree with you about your friend. He should try it, but he should be cautious. I would love to see what happens and hope you keep us posted.

You make a great point. If he continued to struggle in his weakness he might no longer be in the business. Knowing and understanding your weaknesses is very important to becoming a more successful agent.

Great point. Best of luck to you and the other agent in 2010.

Steve, it's interesting how few actaully post to these discussions that they buy leads, probably because the "Oh, no, don't buy leads" voices are so strong and loud. I buy leads and have for years. Like anythign else it's a numbers game. You chase 10-20-50 bad leads for every one that pays off; however, I've never had a year yet when I couldn't look back and see the business that I got from the leads that not only paid for the leads, but ended in a profit for me.

I suppose that there are a number of bogus or shady lead selling companies out there. I've certainly been approached by many and turned them all down, too. I don't pay any commission or per deal charge, just a monthly fee for X-number of leads. I've switched back and forth as the market changed between buying listing leads or buyer leads - right now I'm on the buyer side.

I also get leads from my company - relos and leads off it's Internet presence - but those come at a price too - a split on the resulting business, so they're not free either. Perhaps the lead-buying nay-sayers are old timers in the business who get much of their business from referrals by past customers. I too get some business that way; however, in the current market one needs multiple sources of potential business and buying leads is one poossible source. The key, I think, is to find an honest company with a strong Web presence, since that's where potential buyers and sellers are starting these days. That's why Missy's advice on Google Adwords also makes sense.

I've posted here once before about a secondary benefit of workign these paid leads - the expereince that results. When I was doing 2-3 CMA's a week for seller paid leads, I got lots of market pricing experience in lots of local neighborhoods. Now, as I work with potential buyers, I'm showing houses in lots of different neighborhoods, too. All of that adds to my expereince base.

So, before you let the nay-sayers scare you completely off buying leads, look around at a few of the companies out there that might be able to give you somethng to work on that could lead to business. SUre it costs money, but then sending out postcards or buying door hangers or any number of other prospecting methods also cost money and may have about the same ROI potential.

I just did a blog last week about being honest with yourself, and this is an excellent example of that.

Although buyin leads did not work for me, I know of an agent in a more rural area that was making a killing with these leads.

Steve - It has been my experience that buying leads was more expensive than the results it produced for my company. That said, it may well be that for some products, services and individuals that buying leads make perfect sense. I think that like most anything else, it is one's belief in something and how well they use it that makes the difference.

You have a good point. What is good for one agent isnt always good for all agents. We all have to assess our business and our strong and weak points and work accordingly.

I will not buy leads, but I tell the obnoxious telemarketers I will pay them a referral if their leads ends up to be a closing (settlement).

Steve - This was a very smart business move on the part of your colleague. Nothing wrong with paying for leads if it works for you and you know what to do with them once you get them.

I was a mortgage broker after it collapsed! In the mortgage business there are many lead companies and some take a percentage of the realtors fees whicle some just sale and/or resale to many the leads that are generated from their sites.

I too pay for leads. There are many sites which pay per click to other web sites such as Google and they in turn sell the leads on a per lead or a monthly or other basis.

I personally consider it a cost of doing business (or advertising) as one does need to get exposure and the net is a quick way of making contacts.

You talked of doing what you were comfortable with; it is the same with needing to take a team approach to your opportunity keeping in mind that it is "getting paid" that counts...so do what works best for you and use others to assist you with you weakness or areas you do not enjoy; there is only so much time in the day.

Sonny Landau

I think it helps to remember that virtually all of us are independent contractors which means we get to run our business however we see fit. If you recognize a weakness and find a way to deal with it, I think you are that much further along the path to success! I hope your friend is successful!

Good Post. I have apid for leads in the past that didn't pan out. I also have used a service that I have had 2 closing from. It depends on the cost and yiou need to track the results. No long term committtments. If they don's produce enought quality leads, then cut them loose

I think your point resonates more with many who struggle to generate leads on their own, for lack of time, support, etc. While I do generate leads on my own, I don't think it hurts to spend some money to generate more, in the hopes that they will pan out, if they are worked right.

Steve:

There is nothing wrong with this concept, and recognizing our strengths and weaknesses is important. The problem has been that most of the lead companies are not very good. If you find one that is actually legitimate and provides decent leads, I would find that to be quite useful.

I also agree with the folks that knowing your strenghts and weaknesses helps your business and that finding a legitimate and consistent lead source is the key.

Nice post Steve,

As one of my favorite Real Estate Brokers / Owners told me years ago... find what works for you and do it 10x over and forget the rest..

Steve,

I did that a couple of times but quit when they tried to sell me a lead I was already working.

I pay a healthy percentage as a referral fee but the lead factories that take our mls info, package it and then sell the result back to us as unverified leads, that is another story.

It's interesting but some people do very well when they buy leads while others don't. I think again, it goes back to our strengths and weaknesses as stated above. I have a colleague who does very well with buying leads while I tried it in the past and never had any luck with it. I think it is because I work better face-to-face than "cold" emailing, calling, etc.

I have not been impressed with any of the "lead" companies that have contacted me. Can someone tell me how Google Adwords work exactly?

No buying leads for me. I just don't want to afford it. :)

I think if you're going to buy leads, you need to understand what you're buying. I do get some of my leads from a source that I do a split with so it really only costs me if I do a deal with them. I think just blindly paying for leads is risky. How many times are they selling that lead? How have they verified its a good lead? I don't know of many agents that pay for leads and do well with them.

I guess the biggest reasons realtors don't buy leads is that they don't pan out and you are out the money. If anyone knows of a company that gives out good leads let us know.

I will say in 2009 i signed with a company that I am amazed sponsors on here.

The first time the leads weer almost non-people and you could not keep up, (so many at one time at $$ per pop) And then the worst is the Quality control slick tongued Manager called me to see what the problem was because I had opted out.

I never agreed to do it again but he sent an email explaining some new terms he would offer. The money started jumping onto the old credit card that day. No matter how many times I called him NO REPLY. NONE.

Finally and I mean finally we got it off our card for the leads I never accepted. So just be wise and wary.

And I don't mind saying who it was.

I think it's on a case by case basis. The markets in many areas are different than "traditional" ones, so lead generating sometimes calls for out of the box thinking. Buying leads is a tough way to generate all of your business, but it's not a bad idea to consider it for a supplement. Pros and cons, either way.

I don't believe in paying someone else for something I can do myself. Third party leads come at a huge price and the data is old or incorrect. Paying for leads is o.k., as long as you control how they get there and what happens to them after they get there.

Just depends on the individual! If it is profitable and an agent is able to overcome a few weaknesses in the process...go for it! An agents marketing dollars are really valuable and easily wasted.

If someone finds a system that 100% proven to generate business and qualified buyers/sellers let me know! In this industry, nothing is guaranteed. You really do get out of it what you put in. In the end, hard work pays off every single time.

Thanks for the post!

I think so. Some people such as property managers that do not do sales have access to a lot of sellers as well as buyers if they are vacation rentals. To partner up with someone like that and give them the comfort that if they referred something to you they would be guaranteed something in return would be a good thing. I think they would be happy to know they are getting something rather than having to keep up with what happened to the lead.....I know I would

Buying leads can be a good thing - IF you have a follow-up system. You need to call these people multiple times. An autoresponder and a monthly newsletter would help as well. My focus is to generate my own leads - I like the Adwords idea... But again, how often do you make the call? Most prospects need to hear from you multiple times before they warm up.

I've never purchased leads, but I have spent money on things that bring me leads. It would be my advice to that agent to maybe consider it, but to also work on other ways to capture leads at the same time... building his skills in the area.

That's not compensating for a particular weakness...that is pure desperation and lazy attempt to make easy money in a business that many people who have waded in to try it have no business actually trying to represent someone else in the single largest purchase of someone's life. My recommendation to your friend.....GET OUT OF THE BUSINESS....find something you can do without having to "compensate" because of a weakness to get out there and work for it.

The trouble with using Lead Generation companies is that the good reputable ones already have relationships in all the desirable areas. After having tried one for a year, I discovered that there is nothing they can do for me that I can not do myself. When you are paying 10-25% to someone else for this: Joe Blow, 123 main st, Partsunknown, WA, mickeymouse@disney.com Relocate 6-12 months it is amazing that participating Realtors are unwilling to write a handful of blog articles and receive leads for FREE.

You cant fix stupid, but you can motivate lazy.

I have worked with lead companies in the past and have had success. I also see some shady ones out there as well, so you just have to be careful and If you can generate your own leads, that is always best!

I think your associate did a good job evaluating his strengths and weaknesses, and at the very least was honest with himself.

I hope the lead generator works for him, at least he is willing to give it a try. There's an old saying, the harder we work the luckier we get.

Cheers.

Tap

I don't buy leads but I don't berate agents who do. Those agents work a lot harder than I do. It's difficult in the beginning for many agents to capture leads, and it's a numbers game. If you get 50 leads, maybe one will pan out. After an agent pays his or her dues, they probably won't buy leads anymore, but it's certainly a good way to get started in the business.

Everybody is different in how they run a business. If that wasn't the case, the lead-generating companies would have folded up shop by now. There is always a market to whom one can sell leads.

Thanks for the post Steve. We as a firm are looking into another soure for generating leads. I have turned a number of them down but have found one I am interested in. We are still researching the company and getting some feedback. Like anything it depends on the follow up system and ROI.

Enjoyed reading everyones take on it.

Um, excuse me, isn't paying for an outside blog or sponsoring a community on Localism a form of attempted lead generation?

Having leads come to you online can work for many agents, and it is a great way to get started. I believe that online lead generation should be a part of one's business plan, along with offline lead sources.

What's great is that leads can come from a variety of online sources: blog, Localism, a company-based site, one's own web site, social media, or a 3rd party lead generator (which I believe you are talking about in this post). Most of these come with a price tag, and hey, it's all good.

Great discussion!

Part of the problem is most folks want to buy the most inexpensive leads, that's the source of the problem, cheap leads yield minimal if no results at all. It's a lot like a family that wants to buy an inexpensive home in a lower value neighborhood but they want the equity to build as much as a higher priced home in a good neighborhood. What agents need to do is work with a company that has good data, and can target the right consumer for the product you are offering. I deal with some very successful agents and we handle a ton of mail for clients like First Team Real Estate, and DiTech Loans.

I don't believe that "Buying Leads" really works. They are usually not very good and rarely resulty in a sale. I do believe that agents who can't get "Into" lead generating should align themselves with an agent who may be good at lead generation and is willing to offer those leads for a referral fee. Everyone wins here because there is no money exchanged until a home is sold.

I think the problem alot of agents have with internet leads is they don't know how to work them. Internet real estate purchase leads "generally" are looking to buy in 9 months or longer out. For old hands, who are used to a relationship with a buyer lasting 90 days, maybe 120 days, having to work with a buyer for 10 months is excessive. The same holds true for mortgage leads, they aren't worse, just different. But in the end, nothing beats a hot referral, or a friend of a friend.

Buying leads is tougher than referrals, but better than nothing.

Eventually, you stop buying leads because the business has built up.

I think he would be better off taking that money he would spend on leads and use it to take people to coffee.

I admit you make some great points in this blog. Lead Generation is not for everybody. And most lead generation companies business model to me sucks. If you truly believe in the leads you provide,let me pay you at closing instead of paying for something that I know is not guaranteed.

From all of the comments from my peers here such as yourself,you will think that these lead generation companies would listen and try to work with us. Besides why are these lead generation companies still in business? We keep buying them. Not that most real estate professionals have discovered that most of the leads are not good,they don't want to even be bothered with it. I had a horrible experience with realestate.com which I think is owned by Lending Tree. USED IT FOR A YEAR AND I DIDN'T CLOSE ON NONE OF THEM BECAUSE ALL THE LEADS WERE BAD.

Internet leads take around 6-9 months to convert into a sale possibly longer. Best way to me to generate leads is face to face contact with people we meet outside everyday by us giving people our business cards. People buy leads so I guess they can add them to their drip campaign and think after months of receiving material from them,they will decide to use you as a real estate professional because it is said that a consumer needs to receive something from you at least six times before they will decide to work with you because they kept seeing your face or name from what you have been sending them. But also you never know about people situation. A person can have a job today and God forbid something bad happens-Death of a loved one,Loss of job,illness,loss of investment portfolio etc. So you never know.

Sooo sorry for the long comment Steve please forgive me. Its just that everytime I keep hearing about Lead generation companies,my horrible experience with realestate.com keeps coming up in my head. Please let us know about the company you are using and your experience. I might reconsider if it is working for you. Happy New Year to you. 2010 is going to be your best year ever. Great post.

As a Realtor in the 1990's Ii remember everybody under the sun selling leads. The only company that seemed to have any legitimacy was Home Gain. I tried them like lots of realtors unseuccessfully but that was the market then. I would rather see this realtor put money into good IDX lead generation backed up by a paid Google ad word campaign. At least that way he can target his lead generation.

Steve, I agree with you. While I am not looking to buy leads, I much more prefer and am good at building a referral business, this is definitely a great option for someone if they are weaker at getting new business. I have plenty of weaknesses I am working on. All the best, Michelle

Steve...

Now this is interesting. We were just touching down on this topic with our Son, Nathan, today. The discussion ended with me saying leads don't do anyone any good if the Agent doesn't know how to convert the leads into sales. Do I need to say more? Thought not :)

TLW...ROAR!

I don't see anything wrong in buying leads at the front end...but wouldn't the key be to do such a great job that the referrals would carry you from that point? If you are constantly having to buy leads...it makes me wonder if you are taking care of your clients. Thoughts?

I'm currently subscribed to a lead generating website, but it hasn't been great. I think when the contract is up I may look elsewhere. So far all of my clients have been through either social networking, referrals and networking around town.

It was about self realization and smart business strategizing.

Hi Steve,

You're exactly right about lead generation. I tell my clients to use everything that helps them build their business, including ActiveRain, and drop the rest. It's important to realize that each one of us has different strengths and weaknesses.

Having been in the lead generation business for 5 years this month, I agree with you that some agents are excellent at generating their own leads. However, other agents prefer for us to bring the buyers to them - for a variety of reasons. One of my broker clients uses our service simply because he wants to spend more time with his family. He trades dollars for time. That makes perfect sense to me. I would do the same thing if I was walking in his shoes.

Here's a perspective about lead generation that you might not have considered. Several of my clients use our leads as a way to recruit agents to their team. It's one more smart strategy to build their business. That's what's so great about having a career in real estate. You have the flexibility to build your business in the way that's best for YOU. :)

It seems from the posts here on ActiveRain that buying leads is hit and miss. I've thought about it but haven't tried it. Thanks for the great post!

I've never done it but some I know have and done ok with them. I'm cautious and somewhat suspicious...

Patricia/Seacoast NH

Steve my view is; each person has to determine what is best, if it involves purchasing leads so be it.

Hi Steve. I love that.

I wish more would focus on their strengths. The world would be a more productive happy place.

Many ways to be a Realtor.

Congrats on the feature.

Ken

Hi Steve. One more thing...

Dallasism? :)

I hope all is well,

Ken

I think you have a great point Steve. We can't all be great at every aspect of our business and when we come to recognize that, it leads to adaptation and adjustments. That's what running a business is all about.

Find your strengths and capitalize on them....figure out your weakness and then minimize them.

"Steve, in this business it's important for each of us to know our strengths and our weaknesses, because when we know both and are truthful with ourselves about them we can create a business plan which emphasizes those strengths and compensates for the weaknesses." - That colleague of yours is a smart guy...

I would have to say for me, an issue like this definitely depends on the quality of the leads being purchased. If in fact they come recommended, and have proven to be useful to other realtors, ESPECIALLY when lead generation is ones weakness, why not give them a shot.

I really enjoyed this post

Justin.

I have a lead generation service that I am happy with. I have had some very good leads, very good clients and have converted them into sales. The service is expensive, but it is more than paying for itself. It's paying my other bills as well. It is expensive to start into Real Estate, with MLS dues, fees, signs, cards, photos, the office shirt, mailouts, classes, showing service...and I'm not sure I'd make it without my Market Leader Account.

Steve - I have no had great luck with lead generation services and usually wasted money but if the service works well and comes highly recommended then it is probably the right choice for the agent you spoke of in your post.

[I've never purchased leads, but I have spent money on things that bring me leads. It would be my advice to that agent to maybe consider it, but to also work on other ways to capture leads at the same time... building his skills in the area.]

Tammy nails it to the wall.

The big problem with lead buying is the quality of the leads. It's best to pay for leads you screen yourself - via blogging, websites and direct mail, to name just a tiny few...IMO

Steve:

I'm not adverse to buying leads. I've participated in this conversation. The one thing I hadn't considered and that is if you pay for leads you will find out that there are people out there looking to buy or sell.

I agree with TLW - if you can't convert the leads, it doesn't do any good to have them. On the other hand, if the guy doesn't like to prospect but doesn't mind talking to a qualified lead, then it might help his business.

Buy leads? Let me know when YOU actually sign up!

Hi Steve...Perhaps you friend would be better off if he teamed up with someone else who was good at generating leads. Did you suggest that to him? He might make a good buyers agent for someone.

I think if I had problems getting leads I would look for someone that was very good at generating leads and needed a team member.

Kate

Steve, I like the point you are making here that as individuals we need to do whatever it is that works for us.

I have used Homegain for the last 8 years. It is definately worht it for me, but I can't say that would be true for anyone else. The leads are people who genuinely want to buy or sell and are looking for help. they may not always be realistic about what they can get, but they are looking for agents.

Marcy

Until they are willing to let me pay them more (my referral fee) for their pre-qualified leads, I have no problem with that. I work on a contingency and I pay well. Most referral companies cannot match my requirements. Only real agents with real referrals can.

This is an interesting way of looking at the topic, and it makes sense to try and limit your own limitations.

If you want to go the lead route, try partnering up with one of your preferred lenders.

We're getting quality purchase leads from LeadPoint for 9 bucks a throw. Then, the Realtor comes from one side and the loan officer one the other. It works well because the loan officer sells the Realtor and the Realtor sells the loan officer and as long as both are responsive and competitive, the closing ratio is usually very good. These leads tell you if they're working with an agent or not.

It's hard to work leads if you don't control the conversation from both sides because loan officers are often trying to steer that client to one of their agents and the agent is steering the client to their loan officer. This method creates a nice soooothing echo chamber. :)

Just a thought. . . .

JAN

2010

There are a thousand way to skin a (you know what). What matters in this business is find something that works and work it. Those leads are as good as the person who is buying them. Like anything they have to be worked.

Blog again in a few months and let us know how it's gone for your friend.

Insanity defined: Doing the same thing and expecting different results. If your happy with your current referral sources and have enough business don't buy leads. If you need some more business buy leads and check it out.

Also let us know what sources work and don't work

Tony

I am by no means an expert, but I can tell you I started in real estate in March 2009, and have closed 11 transactions to date. I have three pending purchase deals and two active listings. Almost all of this is from about $300 per month in lead generating marketing. I pay because I am new to the area and had no contacts at all to draw upon. One lead ended up in a $800,000 purchase and generated $24,000 in gross commissions. My very first lead ended up in a purchase, and an instant referral for another purchase. Both buyers have referred leads that will some day be purchases.

I also admit I have chased many bad leads. But if I get ten, I am very happy if only one pans out. I am in the business to service my customers and work, and I consider working leads very hard as part of the package.

Great point and I appreciate seeing the other side of the issue. It is essential to know your weaknesses but I also think working on them is too!

I have purcahsed leads for the past 5+ years, 2009 was the best year I have ever had. Leads are a numbers game, each lead may not be ready to buy or sell today or tomorrow, but if you keep in touch with them - they will call you when they are ready. A consistent follow up plan is key - if you aren't good at following up with clients, lead generation probably won't work for you.

When I hire new agents on my team, I give them my proven system to convert leads. If they follow my program and remain consistent, they convert. If not, they don't........

Here is to a successful 2010.

I have purchased leads and they always paid for themselves but, in the end, I decided they didn't have a return that I could live with. However, or some agents they may work as you pointed out. I have gotten a lot from my efforts on the internet but now know that I just can't keep up with all I want to do and will now be outsourcing some of it. As you said, we should know our strenghs & weaknesses.

I work in a small Exclusive Buyer Agency where most of the agents are pretty successful. We share what we are doing with each other and can see what is working and what isn't.

The personalities in the office very diverse. We have rainmakers, story tellers, logistical planners, maternal caregivers, blunt truth tellers, hard core negotiators, construction experts, agents full of anecdotes and young enthusiastic agents. Some target first-time home buyers and some target high-end clients. Some work in seven counties while others focus on a single primary area. And these personalities work well with different lead generating plans.

The agent who prefers direct mail is not going to generate leads sitting at the bar at the club, who is not going to use website to find interested relocators. Not only that, the leads these people generate are often personality matches for the agent who finds them. So the intensely detail oriented analyst is probably not going to select the agent they met at the bar during a football game.

I agree that one of the great things about real estate is that there is not one path to success. Trying to figure out the mix of tasks you enjoy, you are good at and bring you success, is half the fun.

Good post. My only comment is to consider this. Your making the assumption that those lead generation companies are better at generating leads than the worst Realtor. Personally I don't agree with that. Anyone can easily generate the 10 leads or whatever these companies supply per month. I get calls from those places everyday wanting to sell leads and my response is simply.

I can generate 10X the amount of leads your offering for one tenth of the cost your proposing. All one needs to do is run a well constructed ad in the local paper. A vast majority of the leads generated this way are very low quality but so are the leads those companies are selling.

I have no thoughts about agents or brokers buying leads.

What I do object to is being called from a lead company to sell me leads.

To me, they are my competition just as local agents are my compeition.

I've never purchased leads since I've been a lead machine since 1995. However, like Missy, I have had success with Google AdWords in the past. Those are leads that you're developing yourself, not leads of questionable quality that a lead company is trying to sell you. In fact, most of them are not necessarily selling good leads. They are selling lead management systems.

Steve: There are many people here on AR that wholeheartedly endorse paying for leads & they are successful at it. Your collegue has a valuable point, but I would like to add when he started in this business he didn't study on that facet of our business well enough. It's the whole picture (the wheel with spokes) that he forgot to concentrate on possibly. Lead generation is #1 in order to keep your machine running - like gas for a car. At least his ego let him admit that his lead generating needed some help.

Who are we kidding here? Prospecting and successfully closing leads is a "core skill" in real estate. There are many other occupations out there if you "aren't good at prospecting." Besides, I have yet to see, read or learn about any pay per lead organization that has boosted someone's business (other than the raw lead generator).

I bought into a lot of these so called lead services and have not found any that really work. What I have deducted is that these lead service companies have made real estate turn into a "Panning For Gold" Business. We've turned into a bunch of gold miners and I'm tired of it! Why don't these lead generating services just get their own licenses and work hard like the rest of us. Don't get me started!

Do your research. Not all companies charge for leads...there are a few of us who are referral based.

I've toyed with the idea of buying leads... but haven't yet. I have heard little about anyone that's really done this successfully. So far, best leads for me has been word of mouth and taking extremely good care of my existing database.

I think your friend needs to do a lot of investigation. I've paid for leads that were "pre-screened" and out of 25, none of them were serious once I got them on the phone. Plus it took me over a month to get the company to stop charging my credit card.

Buyer Beware!

I suppose that buying leads and google adwords is the same as spending money for the local newspaper that never paid off, except to the seller (wanting to see his home advertised). I agree with Missy, google adwords make more sense.

Steve,

You make a couple of good points. We all have strengths and should play to them. That said, selling is relational, and if you can't generate your own leads (not counting referrals) you shouldn't be in sales. :)

Steve

Steve,

I see nothing wrong with paying for good, quality leads as I have done in the past and done quite well with it, however most companies laced with slick talking sales people might as well be selling ocean front property in Arizona because you end up getting nothing but feeling lighter in the loafers, and pocketbook.

Your friend was lucky enough to receive good advice. Most aren't as lucky. Lead generation companies are a dime a dozen and it beckons a thought of an old saying from the legendary P.T. Barnum who cleverly said; " A sucker is born every minute".

It is a shame that so many of the "lead" companies are not only in a way trying to scam agents but more importantly, how hard are they really working for the client? I can remember before becoming an agent when I was buying my first home and how much trust we put into these "professionals". Many agents here think of those companies as trying to just scam realtors but what is the contract between these prospective buyers and sellers like? I personally have never dealt with buying leads nor do I know anyone around here who has so I may be way off base...

I am not one to buy leads as I have had no luck. The only one who seemed to make money from the leads was the person selling them. It may have been how I worked them and not just the leads themselve.

Steve, I have tried in the past with leads and they didn't work. Though that doesn't mean that they never do. Some lead generation companies work for others and others not so much. Everyone has their own success ratios and should use what generates them the most business and is cost effective.

I've been using a lead generation company to obtain listings. I only pay a 25% referral fee if I get the listing and a commission from the sale. This works for me although there aren't many leads that come through. The company is Agentmachine.com.

Steve, great post and lots of good comments. I think the giant elephant in this barn is that your friend should grow a pair of stones and learn how to prospect - pay his money to a coach, a mentor, or someone else who can help him in that direction. We are sales professionals, a huge part of selling is developing new business. Just my 2 cents.

I have no problem with the idea of paying for leads, I just don't trust the companies who offer it. I, like you, feel that mostly you are fronting money for nothing. But if you had a genuine lead service....of course I see nothing wrong. We all compensate for our weaknessess...I use a transaction coordinator because I am terrible with paperwork.

It's all about the quality of the leads you buy. It is easy to throw your money away if you are not very careful.

With the debate about buying leads aside - I love the spirit and message of the post. I 100% agree with you. And not only can knowing your strengths/weaknesses lead to more success - but it can also lead to a happy and more balanced life.

Thanks for the post. Follow up in about 6 months and let us know if his choices paid off for him. Also, I wish Dave (#91) would let us know which company he used that gave him such GREAT results.

I used SellMyHouse.com and it has been tremendous. I pay a 25% referral fee on closed deals and more importantly, they are very agressive about lead generation for me. It is an exclusive relationship. Not many people know about them though.

Morning Steve, Although I don't buy leads I would say they might make sense when they free up valuable time for other more productive tasks even though leqd generation may not be a weakness. Happy 2010 to you !

I've not seen ANY pay in advace for a lead system that had any value. The only systems are the ones that get paid only at closing. They are motivated to produce good leads. The pay in advance lead companies are only presenting an illusion.

like open houses, I'm not a fan of buying leads, but if it works --then don't stop

I agree with the post. So right up front let me provide full disclosure: In addition to being a broker, I also have a company that generates internet leads for brokers on a dedicated and exclusive basis. It is very interesting to see the wide variety of results that these brokers and their agents accomplish with these leads. The success or the failure of the program is directly related to the way in which the broker/agent services the leads generated. On the up side there is one Broker that closes almost 10 percent of the leads we generate, on the downside we have a broker that closes less than 1% of the leads we generate. Leads that are generated from the same methodology (admittedly in diferent makets) with very different results. When we dive into the process that each uses it becomes very obvious why one closes at 10 % and the other does not. It really does come down to focusing on your strengths.

Steve, knowing your strengths and weaknesses in this business can help manage the ups and downs and let you know to either partner with someone or hire outside help.

I think you make a very good point about choosing a company that was referred to him by another agent. If someone else you trust has had good or great success with it, it can definitely be worth a try. I have recently started with Google Ad Words and am beginning to see the leas generation from that.

I am an advocate of lead generation through the Internet. However, you can minimize your cost per lead by developing your own campaigns, etc... There is a higher level of lead generation. I will generate about 10,000 internet leads in 2010, and I wish I could get a 10% conversion. These all have phone numbers and or emails to communicate with the person on the other end, but sometimes the lead will not materialize. It is all in the follow up and system you employ. I have seen so many agents subscribe to lead generation to only give up after the first few months, only because the agent did not truly understand how to follow up and convert the leads. One should truly understand what it takes to work Internet leads BEFORE they subscribe to any system. Remember, not all agents are Sales Minded Marketing Agents...

As long as payment is made as a percentage of the sale after closing, I thinks it's a good idea. But if you're purchasing leads at some such amount prior to closing, it's pretty much useless. Though I must confess that when my wife started her real estate career in 204, I purchased a 6 month plan from HomeGain.com. We got about 30 leads in that 6 months - mainly people who wanted to buy beachfront property in Naples Florida for $150K or less (ha, ha!!!). But we did close one lead for a commission of $25K which jump started her career. So that was a great $1200 investment.

Steve.. I think winning the lottery is a better gamble then buying leads. My office has tried this, and with the outlay of money.. AND NOT ONE LEAD. It is not profitable. I'd rather throw the money off a bridge, and let the people below use it... or burn it before dealing with another scam like this.

valerie osterhoudt

Of course I have a bias opinion about this ( http://activerain.com/blogsview/1286731/real-estate-pal-real-estate-leads ) But remember this: Most of the Agents and Brokers that are having a ton of success with third party lead generation are just not talking about it! Trying to get my clients to post on here about how well "buying leads does work" is like pulling teeth!
Of course it works! Real Estate Pal wouldn't be doing so well if it didn't work...lets all be honest here!

I dare anyone to compare what it cost them to generate their own lead vs what we charge you per lead...

I agree that whatever works, go for it! I spend money on my websites and my mailings. For people that don't have a website or don't do mailings and don't want to cold call or go door to door, buying leads (or creating an inexpensive but decent website and using Google Adwords or Homegain's version of it) might be what they need to do. You can be great at working with clients and negotiating and marketing for your listings, but you're not so good at generating new business, especially in this economy. So spend your money on a different lead generator so you can continue doing what you're good at and enjoy.

I joined Redfin this year as a partner agent (I am not a Redfin employee) and have read flak about doing so on AR. I pay a referral fee (25%) at closing. So this is like a lead generator but I only have to pay if the transaction closes. This partnership helped me out in 2009 and if it works as good this year I might stop my mailings for listings, which is expensive.

Great blog Steve... it is important that we identify our strengths and weaknesses.. However it is hard to pay for leads when everyone in town has the same leads...

Steve, great post. I have tried when I first started RE and that did not work. Looking back, I just did not have the right scripts for the follow up. I prefer to deal face to face. I do very well with open houses and door knocking. Make it a great day!

Did your friend end up getting any real clients through the lead generating company? I'm very interested to know. Great points!

Like Dirty Harry said in "Magnum Force", "A man's got to know his limitations." One of the best "Harry-isms" he ever said...other than, "Go ahead...Make my day!" (our favorite line for banks nowadays...)

Buying leads has always led to me paying money for worthless leads. If he pays and they're GOOD leads, that's a good business move if his weakness is generating his own business.

If I had a dollar for every phone call I've received in the last year from someone who wanted to sell me their lead generation program....

The problem for most agents is knowing which lead company they can partner with because there are a fairly high number of them who simply do not produce.

My problem is where most leads come from. They come from internet marketers who invest in getting to the top of the search engine listings to capture the info of as many prospective home buyers as possible. Then they turn around and sell these leads back to the agents in that particular market.

It just seems counterproductive to me to be buying leads from someone who is competing with me directly in the internet marketing arena. Then to be paying them for a lead that I could very well have received anyway if they weren't there to begin with.

Also, many of these lead generation companies try to promote the agents buying leads as their "top" or recommended agent in a given area when truly, they are just the person who bought that zipcode or those particular leads.

In my mind, it is misleading and doesn't benefit our community of real estate professionals in the least.

I'm biased. I've used overpriced generator companies and became addicted to them. But they were expensive.

So I got together with a broker, ate some wings, drank some brew and decided what to do.

We found a programmer and alas a year later have our own system. We just took the best of a couple, repackaged it and live off the thing. (Not the money from the system, the leads)

http://newbuyerleads.com

No set up fee

No credit card info

30 days free

Then $100.00 per month if you stay.

Making it as attractive as possible.

The problem is some boards are trying to hit US with set up fees. ($200.00 to $1500.00) So that won't work. We're trying to make it affordable but someone else (Boards) are trying to get rich.

We've had a bunch try it, some stuck with us and some quit as they had no idea how to work online leads.

Running a Real Estate business is hard. Often you are the Chief-Cook-and Bottlewasher. Not everyone is great at every task. I suck at accounting so I pay for a CPA. Do what you do best and hire the rest. Or at least the things you need the most help with.

Charles made an interesting point about teaming up with a lender. But it could be anyone. Working as a team brings together people of different strengths and perspectives.

Yes, lead companies are a dime a dozen - some good some bad. But there is really is a bigger issue. Lead generation is marketing. So ask yourself how good are you at marketing your business. Some agents are great at it - others could use a little help.

If you need help with marketing your business - seek it out. Find a niche that you believe in and build a marketing plan around it. Your exposure will increase along with your leads and the referral business will follow.

I just went round-and-round with a "lead generator" and had a few issues with their program.

One being that they wanted a 1 yr minimum subscription and when i said this was not sensible they offered to jack up the monthly fee for a 6 month minimum subscription. Gives you the feeling that they don't really believe their product will not show it's value quickly.

Secondly they used the "sign-up" for information technique when a potential contact lands on their web page - this is another controversial issue. Personally, I bail on a site if they ask me for my contact info right up front or for a second search after the initial search.

Third, I couldn't get my head around how they find these leads - they mention all the search engines, publications, realty web sites etc. What spin do I have on how they promote leads for my particular area or type of homes I specialize in?

Regardless of your personal strengths or weaknesses you should understand what your target market is and make sure your promotion $ are spent focusing on this area.

I agree with the earlier comments about adwords - great way to promote your business under your own control.

I have never had good luck with leads I have paid for. I find the companies over promise and under deliver on the quality.

Steve,

It makes a lot of sense to determine strengths and weaknesses and hire someone (at a reasonable price) to cover or help with the weaknesses. We hear less of the success stories and more of the negative stories when it comes to leads. I would think more of getting leads at a reasonable price but have not found any company with good terms to give it a try. I am very skeptical of paying money up front when it comes to leads. But you did put a positive twist on buying leads with this post. At least, some great food for thought.

If a company's leads are so great and qualified, they would not need to charge less upfront than they could make after closing. Most Realtors (myself included) have no problem paying 20%-30% referral fees out of closing commissions.

On one hand it's always good to recognize one's strengths and weakness, but, I've never had a good lead come from one of the lead generation sites. If this agent's weakness is being shy, or not being able to meet new people on his own, perhaps the money he would spend on lead generation he should spend on a professional website, that has SEO optimization and a good way to capture leads. Another possibility is to find another agent with different weaknesses and strengths, but will compliment his. For instance, there may be an agent that is very good at contacting new people, but, not strong on listing presentations etc.

One of the issues I often have about lead generation companies is the bait and switch tactic, of saying that they have a "referral". This is so dishonest. Now, when I receive one of these calls, I ask them point blank if they are an agent in another state. Is this a client that they know and is relocating? If not, I explain that this is a true "referral"--otherwise they are trying to sell me leads and I call them out on it. Usually, they are not an agent but a telemarketer. My experience with leads that I've purchases was that they would present this as a person who wants to sell their home, when in actuality, it was someone wanting a CMA because they are thinking about refinancing. Needless to say, after a few of these, I was not a happy camper and discontinued the service.

10 years ago, when I was an Engineer and not in the Real Estate industry, I created lead generating websites for Realtors as a hobby. I tried many different types of websites and Realtors and learned I've really got to be selective with the Realtors.

The successful Agents understood the mentality of the Internet Enabled Consumer and understood they needed to be treated differently then prospects that came from someplace other then the Internet. They also responded to the lead within 2 hours of its submittal, while it was still "hot". The following four hours the lead is "warm" and you can pretty much throw it away after that. Unsuccessful Agents didn't take the time to understand prospects initially desire some annonominity, and wanted to establish a foundation of trust and needed to be comfortable with the Agent, before exposing themselves. It's an entirely different sales channel and needs to be treated as such. Successful Agents took the time to understand this type of consumer and their increased sales reflected that skillset.

Years later I entered the industry on the Mortgage side and used my experience to generate my own leads. For 6 years I've lived off the leads generated from my own websites. Recently I've been preparing to do Purchases with Reverse Mortgages, so I'm going to revert back to the former model that'll include Realtors. My fear is teaming with Realtors that don't understand the Internet Enabled Consumer - because they won't be able to work the leads properly and then they'll tell their peers the leads are bogus and a waste of time.

I'm going to target Laguna Woods, a Senior community in California, and Villa Park, another local area with lots of Seniors and high priced homes. Most my homework is done and I'm ready to move forward ... finding the right Realtors to team with will be my challenge.

I've been in sales and marketing for 30 years and one thing I've learned is this.

Sales and marketing are two separate functions.

When we as Realtors are trying to gain new clients for ourselves, the sales function only begins when we sit in front of a client and hopefully show them the advantages of signing a buyer or seller agreement with us.

We cannot get to the sales part unless the marketing part is also done.

The marketing function is everything that happens prior to the sit-down. It is the attraction of prospects that may have need for what we do. It runs the gamut from sitting at open houses or floor time to posting on Twitter, to writing blogs, to doing mailings, to joining civic groups, to cold calling, to knocking on doors, to giving out pens and calendars to everything else we can choose from.

If a Realtor decides to do all his marketing himself and it works - that's great. If he decides to outsource it, that's great too.

The argument that someone who outsources their lead generation is somehow deficient or lazy is usually argued by the same people who believe that in all areas of life that THEIR WAY is the ONLY WAY.

I have a relative who takes it as a personal affront when someone uses a different set of street directions than he claims to be the best. He really gets angry about it. I actually find it quite amusing that he cares so deeply about it.

To present a case that it's somehow wrong to pay for leads because it's something "you can do yourself" is, IMO, very shortsighted.

You could make the same argument about hiring an administrative assistant to do your paperwork. Certainly we can all do paperwork. Does it make someone less of a Realtor to hire an assistant?

How about auto maintenance. I drive my car a lot in my business. I am quite capable of changing the oil myself - yet I pay someone else to do it. Does that make me less of a Realtor?

I also could build a website myself (not a great one but I could do something basic) but I don't. I choose not to spend my time coding HTML. Does that make less of a Realtor.

My responsibility as a Realtor is to represent my buyers and sellers in their transactions.

My responsiblity to myself as a self-employed individual is to choose how best to run my business. There are many ways to do most things.

So, for those of you who seem offended by the "lazy, incompetent" Realtors who pay someone else to generate leads, I think you need to take a chill pill. There are few absolute truths in the world but I can absolutely, positvely, guarantee 100% that however you run your business - your way is not the only way.

I don't work with lead generators and here is why:

1. They either want too much money upfront or whopping 30%+ at closing. Sorry, thats TOO MUCH MONEY for someone who is handing me a name and a number.

2. Every area of the country is different, so don't scream that I haven't stood my ground on this: Our commissions have been beaten down to the point where unless its for a purchase/sale of over $600k, I'm not interested in either a referral or the purchase of leads. Why? Because there is now way to properly service these clients and come away with more than minimum wage. If the buyer/seller is willing to pay a minimum split to me, then that's fine - but most are looking for bargains.

3. Most of them sell the same lead over and over again. The leads I generate on my site are mine.

4. All too many lead generators offer no true value to the consumer. They merely use the listings we generate and sell the names back to us. Think on this - part of the reason your website isn't generating hot and toasty leads by the bucket is because these lead generators and their large sites are getting in your way. I won't work with them, because doing so encourages more of same and is cutting off your own arm.

It's all about prospecting. Creating a website, optomizing that website, advertising in the paper, posting on "free" websites, cold calling, buying leads, referals, past clients - if it doesn't cost money - it costs time. The only way to make any money in this business is to have a client. You do what you have to do to get them. I do suggest you track your various lead sources and make your choices based on closed business. For years my business was 90+% personal and referrals. It was great. In the changing market of the last 5 years, I have had to try other methods

Two reasons why most agents "have a bad taste in their mouth" when it comes to buying leads.

1. The companies that they purchase the leads from are fundamentally dishonest. The leads are generated via some offer from the web that offers them anything from getting the value of their home to free trips to wherever. Leads like these are for the most part, not interested in either buying a home or selling theirs. So IF the agent tries to contact them and IF the agent gets in touch with the "lead" the agents are disappointed with the results.

2. Once they get the leads they have no easy way to keep in contact with them. Lets face it the majority of agents will not call a lead that has given a phone number. It is shocking! The amount of work that is required to "incubate" an internet lead on ones own is WAY more work than most agents will do.

There are some good systems out there that generate leads for brokerages but there are two problems with everyone of them.

1. They require the looker to fill out a intrusive form first or they make it completley elective on the leads part. Once they register the site then asks the lead to tell them what they are looking for. This practice leads to very low conversion rates therefore creating low sales rates.

2. If they do get them to register and fill out a form telling them what they are looking for (Most will say all properties in all areas from 0 to 10 million dollars) The systems then start sending them emails with links/info on those properties and after about 4 of those emails they will opt out.

I believed so much in the internet as THE place to concentrate our marketing efforts that we set out to create a system that would correct not only the problems listed above plus but a ton more. We decided that the only way that the average agent could make money from the internet was to take 95% of the work they would normally have to do and automate it. After allot of work and testing in our own brokerage. We decided to find like minded brokerages across the country to create a referral network of internet savvy companies that we would provide them with our technology, train them, support them and show them how to increase their sales volume 3X. Lets face it to website and lead generation companies once they sign you up you will only hear from them when it is time to renew or if they have something else to sell you.

We are not a website or lead generation company we are a brokerage that now does 99% of our business through our partnerships across the country. Since 2005 our partners have sold over a billion and a half dollars in real estate.

We have been successful because our partners concentrate on what they do best, sell real estate and let us do what we do best.

www.referralsincorporated.net

Thinking more about it. When I started in the business in 1980, I was given a desk and was told to wait for the phone to ring or for someone to walk in the door. When I brought in a computer, built a data base and then spent some money on direct mail, my office was shocked. I was able to leave those other realtors in the dust.

The world of real estate is changing faster than ever. Be inovative, try ideas others are using, go back to basics - and invest in "your" business. I always heard that you should spend 15% of your net income on marketing. I think it is still the way to go.

Hi Steve..I'm with you, I see countless business's plying for our business, and you said it want money up front and a credit card with no guarantee of results, but lots of testimonials...I presume most are made up.

This is a contact business. touch as many people as you can in daily..personaly on the phone last but least by email. It seems to me if lead generations company are as good as they claim, then why don't they get in the business.

There are a lot better ways to get qualified leads, such as Open Houses..do them daily if you like, go call on Expireds and FSBO's in person, knock around just Sold listings, Heck Stand on a street corner and Hand Out Business Cards, drop by and see past clients, ask who do they know that's planning on making a move etc etc. Buying Leads...no for me, I have a Company called Tiger Leads emailing me daily, saying if I do not take their leads they'll sell them to someone else in my area..Make a Plan, block off time to call past clients, reply to your own leads, that's novel.. etc and soon you'll be too busy. If you're in a slump, ask other Realtors in your office for their leads and pay them a referral fee.

HAVE YOUR BEST YEAR EVER IN 2010 !

So I'm curious. For those who are "for" purchasing leads & have done so successfully, which company(ies) did you use or would you recommend?

Same for those who did it and had no success or felt ripped off. Which companies should be avoided? I think that would be helpful to share with others. Don't you?
Aloha

Debra

When I started working as a real estate agent, I purchased leads from JustListed.com, Market Leader. I paid around $70 per month and received good leads mostly. The key was quick response and no hard sales, just being helpful with the market. I stopped the service after a year or so, only because I was doing okay with my own lead generation through my website. However, the leads I had developed through Market Leader stayed with me and several closed on homes a year later, just because we had stayed in touch and when the time was right for them, they used me as their "Buyer's Agent".

I do believe it is truly the "service oriented" approach and being there for questions and answers that pay off...along with keeping in touch on a regular basis with interesting and useful real estate information. That's why I enjoy blogging now, I suppose. Marketing yourself is so key in real estate, and sales will follow.

Each person has to find what works for themselves.

I agree with post 148

The leads are generated via some offer from the web that offers them anything from getting the value of their home to free trips to wherever.

I have also tried the paid lead route...spent $500. for a year of the worst junk I've ever seen! Just a bunch of fake names, numbers and email addresses. It may work for some - and there may be some really good lead sellers out there, but I found that the one I tried didn't work well for me. I will say though, kudos to your colleague for recognizing a weakness and trying to find himself a solution - he is already on the right track! I hope it works GREAT for him!

You can spend all that money to generate your own leads.

For example, if you are paying $100/lead (can you get em that cheap?) Why don't you sent up a web-page and advertise it on Google $1/click. Out of 100 clicks, let s say you get 10 contacts, Do the math.. its better to do it on your own.. You control the quality and the numbers too..

YES, we ALL have strengths and weaknesses, and getting assistance with lead generation is a valid area, where someone might want some help. cant do business without prospects.

Then HIRE SOMEONE LOCALLY, in your OWN COMMUNITY to help you with a CAMPAIGN, SEO, ADWORDS, that you can control. HIRE someone in your own community who MIGHT BUY A HOUSE, hire someone in your own community, who might GIVE SOMEONE A JOB.

I FOUND OUT MY LAST LEAD GENERATOR (and one thats been on the boards lately), WAS USING THE KEYWORDS FSBO TRADES, Trust me, I would never pay for those keywords in my own campain...no matter HOW CHEAP they are. you see, They promise to deliver LEADS, (not necessarily good ones), and they are there to MAKE A PROFIT.

This newest twist gives them 30% of my commission for what? for me working the leads, sifting thru the garbage, working for weeks or months with the clients, spending the 30 days to close, and because they EARNED IT? dont think so...GO TALK TO SOMEONE LOCALLY ABOUT DEVELOPING A BALANCED CAMPAIGN.

IF YOU ARE GOING TO SPEND 10-15% OF YOUR INCOME ON ADVERTISING, HAVE SOME (LOCAL) CONTROL OVER HOW IT IS SPENT!

It comes down to this...DO YOU HAVE ALL THE CLIENTS YOU WANT OR DON'T YOU?

If you do there is no reason in the world to buy leads or pay a referral fee. Some Realtors have their own lead generation system...which by the way, takes a very long time and money to create and maintain. Nothing comes free.

Personally, I'm very lucky that many Realtors do not share Gloria's viewpoint. It is one thing to spend the ad money required to generate a 'lead'. It is an entirely different story to generate a 'client'. The obvious key to lead generation is conversion to an actual client. Our Realtors would agree that a 25% referral fee is a small price to pay to have access to the brands, marketing, service platform, and call center required to convert leads into clients. It isnt a few hundred dollars a month as a few have mentioned. It is thousands a month in certain markets and in our case it is literally tens of thousands of dollars a month. Web designers, SEO experts, call centers, email blasts, databases, CRM,etc all cost money to maintain.

At least on the referral side of things, you are either excited about getting potential clients referred to you or you aren't. If you are not, you are absolutley able to create your own lead system. But I will tell you, do not confuse some lead companies with others. An internet lead that comes from an ad asking for their name and number in excange for a house value is one thing. Market building is not the same as simple lead generation marketing however. We are not all the same.

Jason Roberts

www.SellMyhouse.com

Steve I think you might have something there. Also, I do think that you have to effectively get those leads and turn them into leads that say they "do want" to work with you. I did try a lead generating Company over a year ago and I found it very difficult converting those leads, of course the leads were not qualified upfront either and most did not even respond to the emails or the telephone numbers were fake, not sure on this one.

I do buy leads as well as generate my own. I get a good completment of buyers and sellers that way.....................chris

Wow! With this many comments I don't know how to beging to respond but to say thank you! I love writing posts that encourage discussion and conversation and this one certainly has done that. I have received numerous e-mails asking for the name of the lead company that my colleague is using. I asked him and he said that he is still evaluating several, so I do not have a name or any experience with one to share, but if he offers me permission I will let you know which one he decides on.

Again, I appreciate all your comments. I have read all of them and shared them with the colleague who inspired this post and based on what he's seen he said he's got a lot to think about thanks to all of you and I think I've convinced him to start blogging! :)

I have bought leads from a half dozen companies and have found that there isn't much difference between one and the other. Most have some kind of "secret sauce" that they will give you to help turn your leads into gold. Haven't found any "secret sauce" yet that worked very well. Lead companies usually sell you the partial identity of someone who hit on one of their prospect attractors. Supposedly, they can attract leads cheaper than an individual agent, resell them at a profit, and still save the agent money, and they may be right. Until 2008, it took 40 leads to get to the table once. In the last couple years, it has taken closer to 60. I have bought $60 leads and fifty cent leads, and the only difference is the price. That said, a lead is a lead, not a client, not a transaction. The lead company's responsibility ends when it delivers the raw lead to you.

Overall, I have done a little better than 5:1 ROI on purchased leads. Given the time and effort that goes into contacting, nurturing, and qualifying, I think a referral fee of 25-30% to have that work done for me is a good investment.

My first year as an agent, I spent over $12,000 on "purchased leads" with at least five different companies. The result? One sale, netting me a little more than $1000.

Many of the lead generation companies, particularly the ones that guarantee a minimum number of leads per month, are now under investigation by consumer groups for fraudulent practices, such as entering bogus information in order to make certain their clients get the minimum number of leads.

In a nutshell, it is VERY easy for these companies to snag leads and sell them off to unsuspecting agents and fraud them. Your money is better spent hiring someone to optimize your web page for lead generation. The leads I get from my web page are far more qualified and bring real leads.

I have tried the lead purchasing route and no luck ever. I am good at turning calls, e mails etc in to clients and closed business, but never had luck with leads.

I have a great IDX site that my prospects and clients love. It is inexpensive and impressive. I am using Google Ad Words to drive traffic to it. I also just signed up for NetBiz to see if that works as well.

Anyone else use NetBiz to drive traffic?

I'll have to add that Google Adwords does work. It's very true that you can generate leads without paying for them, however, the question becomes what/how do you want to leverage in your business.

Many people have the skill set to lead generate very well without paying, but still chose to pay for leads because of leverage. Great discussion!

God Bless!

I wonder how many of us would pay for leads if we were just starting out in "this" market...

Wow, this produced quite a thread.

Thanks for all the comments; good and bad.

I think there is a place for using a lead company as part of the whole marketing effort. I do and always make more from that source than I pay, plus it adds to the client base for referrals, which are free!

We all pay for leads one way or the other. We pay by "buying" from a company or we pay by "purchasing" them through what we do called marketing.

Hi Steve...Buying leads is like being given "fools gold". You think it is worth it, but it never pans out.

Jerry Gray CRB,CRS,GRI / Allen Tate Realtors / Winston Salem, NC / 336-918-2433

Hi Steve...Buying leads is like being given "fools gold". You think it is worth it, but it never pans out.

Jerry Gray CRB,CRS,GRI / Allen Tate Realtors / Winston Salem, NC / 336-918-2433

My best leads are those that I have received from fellow professionals near and far. They are sweet Vermont Cabot butter and real maple syrup for my pancakes. (can you guess that I am a hick at heart from Vermont). Leads from fellow Realtors(r) is what it's all about; these are the hard leads. But I too once paid for leads and most were dead ends. I often felt like someone was testing their systems. They were just too soft. But that being said, the goal is to ensure that the lead generating company has plenty of checks and balances in place, and a guarantee to credit if they do not live up to their promise of confirming the validity of the leads data entry.

Good luck to all in 2010. And if you know of anybody who is looking to buy or sell in the Greater Boston Metro area, I would much appreciate talking with you.

Bart Foster, Realtor(R), ePro(R), SRES(R)

http:/bartsells.com

All who are saying it would be a waste of money are referring to themselves. I always say the only way to fail in this business is to quit but exactly how to be profitable is a moving target and we all try new things from time to time. If lead generation doesn't work out, perhaps, by that time this agent may feel stronger and more confidnt for some reason yet to appear on the horizon. Two of my staple phrases will work for this situation. "Oops never mind" & "just keep moving."

I know many who use lead generation and swear by it. I think you are right in that some folks just have a difficult time with prospecting and some that are just terrible at marketing - that is why there are tools such as these out there.

We have been fortunate to be able to garner enough leads through our networking and advertising as not to have to look to any sort of lead generation. Some could say that lead generation could be a myriad of sources from paid lead generatators, to paid placement on the search engines - I say whatever works for you.

Do not buy leads,invest in technology.

I got to where I offer the lead generation company a better deal than $65-$100. I ask the company to do a referral of 25% which gives them more money in there pocket. They always say NO because they only sale a LEADS. What does that tell you. They only want your money! Chances are the company does not hold any type of license in real estate what so ever and their selling leads in states the might not be legal. Realtors Beware.

I have not personally used a lead generating service but I know several successful brokers who use one of the more popular lead generating systems available and each of these brokers cite this service as a mainstay of their business.

JAN

2010

Like everything in real estate, what works is evolutionary. During the boom years, I bought leads and got a great ROI because my marketplace was a huge relocation destination. Toward the end of my lead-buying years, the leads got more expensive and the ROI dropped. Some of the lead generation companies didn't keep their word, either, as the market across the country tanked. Eventually I stopped buying leads and began working to generate my own. That's why I'm here in AR.

I think that you have to analyze the ROI of any lead generation system that you use. At the time, buying leads was a better investment than paying referral fees to my company or other agents. As the business changes, the way an agent generates leads has to change as well.

Buying leads can be very rewarding when dealing with the right company. I was "burned" several times and started really checking programs out prior to making a committment. Numerous companies are very high pressure and to me that indicates I should just flat out say no thanks. I have used RealtyTrac with incredible success. I pay a flat fee each month but one closing as a norm covers that fee for the entire year and the rest is mine to keep.

Each of us may have to try what works for us. I have used a few lead companies in the past. Only ever had one lead that actually led to a closing and that buyer I worked with for over a year. I don't think I will ever buy leads again but prefer to work a good referral system. Paying someone 25% referral fee for a positive sale is better than most.

I have had great success with google adwords and also with linktechsolutions (don't know if that's their current name). They placed my local site in the colored bars at the top of the page for my tightly targeted niche for just $25/mo. I did that for six months. The result is that my own website now ranks number 1, 2, or 3 in Google for my target keywords. The trick for me was very specific niche adwords.

I've not had success with pay for leads either. But I do get concerned about people's negative comments aimed at lead-generation salespeople. I see the same kind of comments towards Realtors on some consumer sites..."they're all worthless" "they're taking advantage of us" etc. If the salesperson believes it works, and many people on this post have agreed it does work, then who are we to call the kettle black?

you know BOB has a contest about this...i have used purchase buyer leads and i am writing a blog about this experience for the contest...but the conpany that sold them to me just over loaded me with them and i could return them but if i could not get the buyer answer the phone then i could not return the lead

Steve,

Great advice! And it's very important to KNOW/ADMIT what your strengths & weaknesses are!

I would buy seller leads if I found a legit company. My blogs and websites generate tons of buyers. I need inventory. I only had luck with one company and then they went out of business. I paid up front $800 and they were supposed to send me 10-12 leads. The first lead they sent I listed and closed a $700K property. They never sent another lead but it was still a good return on an $800 investment.

JAN

2010

Wow what a lot of comments, on both sides of the argument! Congrats on the feature!

Steve,

Great post. Thanks for sharing your opinion. Business development is definitely a skill on its own.

Regards,

Peter Ferrigan

Steve - So succinct and well-said. Doing what you're best at is what makes any business flow and become successful.

Steve - When you compare buying leads to your own niche of short sales that require commissions to be negotiated it probably all comes out in the wash. When I worked in relo the referral fee was 35%.

JAN

2010

Something to think about. I think the most important thing is to know what to do with the leads when you get them!

JAN

2010

Good point. Some leads are worth buying and some are not. I think teams of two or more have a good advantage of multi-tasking with duties and don't have to rely on purchasing leads

JAN

2010

I haven't tried any referral services as of yet. But I don't think from what I've heard that it is for me..

JAN

This a different and fresh perspective on lead generation and managing your business. I think it makes perfect sense.

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Steve Shatsky - Dallas Real Estate & Short Sale Specialist (214)213-0340

Dallas, TX

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