I've never fooled with them.  Most of the leads I get from internet sites like Realtor.com and such the people don't even want to give out a phone number.  I like real referrals as you said.

Mike:

I rather purchase mailing list, of the target area I wish to work in. Many of my fellow REALTORS have tried buying leads and the success ratio has been zero.

Lead lists make me think of Glengarry Glen Ross.  I never saw the play, but the movie is great.

Nothing will ever replace good old fashioned client relations.  You might be able to meet someone through a lead list, but if you don't build trust with that client, the list was a waste of time and money.

I'm with you Rob.  I'm not a big fan of rejection and would much rather talk with people that like me.  Or at least they pretend to like me.

Thanks for the suggestion Lorraine and Loretta.  I'm a big fan of being strategic with our marketing dollars and targeted mailers seem like they make sense.

You're so right Steve.  Trust is the key when people are dealing with one of the largest financial decisions of their life.  I'm not that into phone trust.

When I started in the business 3 years ago thats all I closed (Internet Leads and Mailers).  Now 95%+ of my closings are Referrals. 

Hey Jacob.  That sounds like a really healthy shift in your business model.  I appreciate your thoughts.

Hi Mike: I too called leads when I first got in the business. The most difficult thing it to build a realtionship with the borrower. Now, I work exclusively by referral. Although it takes longer, you tie your customers to you and not just the lowest rate or fee.

If your new agent really feels that he need to use the leads then work out a deal where you will pay for each successful lead.  So lets say that he buys 1000 leads and gets one deal out of it, you pay him a pre-determined amount.  If he is good at working the leads then he can come out way ahead and you have lost nothing.  But if it turns out to be a bad deal the he bears the cost.

Wise words Paul.   I like the idea of creating a relationship and not just a rate.  I get the feeling that leads are kind of like bicycle training wheels.  You can still make progress, but you don't have the freedom and confidence yet.

Great thoughts Mel.  Thanks for the suggestion.  I can see how your system puts the responsibility on the loan officer vs. me.  People are much more motivated when they've invested themselves.

Mike - I am quite envious of your company.  To have a company whose base is referrals is quite an accomplishment and, hopefully, insulates you to a degree against many of the negativity surrounding our industry.  I wish that I had spent more time on that in the past. 

My company is heavily involved in Direct Mail and Telemarketing, both of which have, thankfully, been successful for us.  In our search for a third leg for our marketing table, we did purchase quite a bit of Internet leads over the years.  It will come as no great shock to you that much of our experience has been negative - recycled leads, 50th person to call, etc. 

But, I must tell you this:  there was a time when we were purchasing leads from lowermybills.com.  At that time, we had one, dedicated woman working on the leads and we say a tremendous ROI - far better than the lead cost of Direct Mail or Telemarketing.  I believe that it was a combination of some decent leads from lowermybills and, more importantly, a person whose sole job it was to work on them.  These leads are inherently "weaker" than a call into your office from a piece of Direct Mail and certainly not as strong as a referral.  I found that once we exposed her and anyone else we had to "stronger" leads, the Internet leads went by the wayside.

So, I would say that if you have an LO with a proven track record of success with Internet leads who has a system in place to continuously follow up with people who are often difficult to get a hold of, then it is probably worth doing on a trial basis.  Best of luck. 

I started my career over 6 years ago working nothing but internet leads.  I still subsidize my referral base with them every now and then.  It might not be such a bad idea but I would also strongly encourage this LO to start building a referral base from the contacts he makes with the leads.  As for lead companies, I think they are really all the same.  Just pick your poison.

Referral based business will give you less gray hair! :)

Great post!

You are right, there is no such animal as an exclusive lead.  So  consequently there should be NO reason to pay and outrageous price for any leads. 

There was a time that I spent $500 for 500 leads said to be 30 days old and did pretty well with, but it was a ton of work getting through them and a lot of negatitity in doing so.  It took about 3 weeks getting through them in a through manner.  I got 3 loans out of the bunch and made more than my money, but it was hard work and energy consumming.

Steven.  Your genuine and thoughtful response is the type of behavior that will bring you a lot of success.  Thanks for sharing your experience and allowing me to learn from it; you truly have helped me out and I appreciate it.

Don.  I really like the word subsidize.  It's good to have multiple sources of business and leads, although time consuming and draining, may be the right source for the right person.  Good thoughts.

Casey.  I can't afford any more grays, so I'll probably go light on the leads!

Find a Notary.  Good synopsis of the process.  I need all the reality I can get.  I tend to function in the ideal vs. the real sometimes.  I'll take your advice on not overpaying.

Mike, what "systems" do you have to deal with the mass influx of leads? Some lead purchase programs are better then others. Back in my Realtor days, I paid for House Values and in 4 months it more then paid for itself. What I liked about House Values was the systems they had for tracking your leads and the automatic drip campaigns that you could set them up on. (They have lender leads there too by the way, never checked it out though). 

Just buying "leads" with no systems in place could prove extremely exhaustive. The average internet home shopper is 6 months to a year out so the loan leads may be just as far out. (Just a guess, haven't seen hard data on that. Could be less though I would think.) 

I agree with much of what has been said about mortgage leads - they are terrible...why would anyone buy leads from LendingTree when they write their on mortgages?  I even heard that lead generating companies sell leads between them selves to generate more profit.  That is why the consumer is telling you that they have been contacted 30 times already - Exclusive Internet Leads - don't think so...There are lead companies that are willing to buy a LO's TD's just so they can sell them to anyone who will buy them....beware of what you are buying.

Referrals are the only way to go. 

I bought some leads with a group of fellow lenders about 5 years ago and they were worthless.  Most of the people had either already secured a loan or were so shell-shocked from the barrage of calls they received that they had disconnected their phones.  Maybe they have gotten better, but I doubt it.  I haven't ever spoken to anyone who thought they were a good idea who wasn't trying to sell them to me.  Good luck!

Hey Jeff.  Yeah, my system is this new loan officer dropping the hammer on these leads.  He has been working Internet and trigger leads exclusively for the past 2 years and doing very well.  He is committed to making any lead system work and his W2 has made me a believer.  We'll see how things pan out, but I hear you on the nature of the folks that are filling out those online forms.  Thanks for your thoughts.

Thanks for your opinion John.  I have never purchased a lead for the reasons you mention and I'm curious to see how my first batch turns out.  I guess it's a lesson that we all need to learn for ourselves; what works for some doesn't for others.  I am a big fan of referrals and will continue to make that my loan platform!

Shell-shocked.  Good choice of words Kevin.  I appreciate you chiming in with your experience.  I'd much rather learn from other than make the mistakes myself.