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Why You Shouldn't Buy Real Estate Leads!

By
Services for Real Estate Pros with Reply.com

For more information on Reply! Real Estate, visit www.ReplyRealEstate.com.

In last week's blog, we asked for feedback to help make our online lead generation program better. In that discussion, there were many great ideas and a couple of recurring themes. You requested transparency about what a real estate lead generation program can and can't do, and less risk associated with paying for the leads.

Here is what we believe is essential for transparency:

  1. To be effective, a lead gen program will cost approximately $1,000 per closed deal
  2. On average, an agent will close between 2%-8% of the total leads received
  3. Close rate will vary based on: lead quality, follow-up, selling ability
  4. Success requires patience, about 50 leads over 6 months is necessary before transactions close
  5. With online leads, many phone calls (5-6 per lead) are expected to an individual lead
  6. For 100 leads, the approximate breakdown you will receive is as follows:
    1. You will be able to reach 50 leads
    2. 30 will be interested in your services
    3. 2-10 will close
  7. Develop a system to measure return on investment for your spend on this and other marketing programs so you can compare apples to apples
  8. Once a close rate is achieved, if you want to sell more houses, you can simply purchase more leads based on your processes and return-on-investment
  9. Following the above steps will allow you to proactively grow your pipeline and build consistency in your business

Regarding less risk associated with paying for leads, we are so confident that our program will work that we are offering a limited-time, RISK-FREE Guarantee!

Success Guarantee: If you buy 50 leads over 6 months and do not close AT LEAST 1 transaction (2%) or have one in escrow, Reply.com will provide you with free leads (up to one full year and maximum of 60 leads) until you close a deal. That equals 110 opportunities to close a deal! If you only close 1 out of 110 (0.09% close ratio), you will still earn at least $1650 in Profits!

You don’t have to take our word that Reply.com works, please review our testimonials. If you give lead generation enough time and follow the process – you will close sales.

Reply.com Testimonials from real estate professionals who have used our service:

"One third of my current listings came through Reply!. It is definitely a numbers game, so you cannot plan on every lead working for you. But you can plan to develop relationships with the leads, and get them comfortable with the work you can do for them. This has been a great source of business for me, allowing me to meet and develop new clients." - Mark Griese

"Over the last year I have done $2 million in sales and have gotten a $30,000 return on my investment from the Reply! program. Currently I am working with two sellers and one buyer I met through Reply!. I would recommend this program to anyone who is persistent. It may take buying a few prospects, but the transactions will follow!" - Debbie Leiba

"Working with Reply has been very good. Unlike other companies who promise a certain quantity of leads and don't come through, Reply! always fills my quota. My goal is to have a quality conversation with at least one potential buyer every day, and Reply! helps me do that. Reply! is a great tool to help you build your pipeline and make some sales in this market!" - Matt Green

*** Full terms and conditions below.

Let’s look at the various potential earnings (assumes an average commission of $5000/house sold):

  • 4 Deals Closed – 8% Close Ratio = $20,000 in commissions Total Spent: $2,750 Profit = $17,250
  • 2 Deals Closed – 4% Close Ratio = $10,000 in commissions Total Spent: $2,750 Profit = $7,250
  • 1 Deal Closed – 2% Close Ratio = $5,000 in commissions Total Spent: $2,750 Profit = $2,250

In their own Words (video of Agents who have been very successful with us):

*****Terms of Promotion*****

Summary of your Service:

  1. Valid only using our Reply! Real Estate Program
  2. You must use the promo code: ActiveRain
  3. Must pay for a minimum of 50 leads
  4. $54.95 per valid lead
  5. $54.95 one-time setup fee
  6. Receive Credit for invalid leads. Lead Credits will be given for the following reasons, provided they are submitted within 72 hours of being sent:
    • Invalid name
    • Invalid phone number
    • Invalid e-mail address (ONLY if the phone number is also inaccurate)
    • Duplicate lead from Reply!
    • Minor under the age of 18
    • The lead is from outside of your requested sales territory
    • The lead is from another real estate agent testing the system
  7. Pay as you go – Lead fees billed Thursday following week they were received
  8. If you qualify for free leads – you must pay $50/month account maintenance fee during free lead period. Cancel at any time with 30-day written notice by emailing service@replyrealestate.com.
  9. Check leads online 24/7 using http://my.replyrealestate.com
  10. In closing, there were comments related to the financial stability of Reply.com. Let me assure you we are eight years old, profitable, cash-flow positive, and growing. Moreover, despite the economic downturn, we have accelerated our growth rate. We were able to accomplish this growth because lead generation does work when the leads are worked.

    To Your Success,

    Adam Carabetta
    Director, Retail Real Estate Operations
    [E] Adam.Carabetta@reply.com
    [P] 925.983.3396
    [F] 925.476.0323

    Reply! Inc.
    12667 Alcosta Blvd., 2nd Floor
    San Ramon, California 94583

    www.ReplyRealEstate.com

Comments(15)

Show All Comments Sort:
Thomas Fiorillo
Striker Realty - Union, NJ
Had experience with Reply last year, I believe I would have received better quality leads if I threw darts at the white pages in a telephone book. Would not cancel easy, kept offering free leads, but still pay maint. fee. Its a huge cash flow for Reply, and there is minimal cleansing of the leads, if any at all.
Jul 26, 2009 09:17 AM
1~Judi Barrett
Idabel, OK

The comments so far do not sound good.  I've never done business with Reply but have received cold calls from them.

Jul 26, 2009 10:05 AM
Charles Stallions
Charles Stallions Real Estate Services - Pensacola, FL
850-476-4494 - Pensacola, Pace or Gulf Breeze, Fl.

I think you interviewed the wrong folks. Here is what a good program is, get your own leads as a company and refer them to agents on a 25 to 30% referral fee nothing else it could be that simple.

I don't work with buyers so I refer them out to agents for a 30% referral fee for the first 5 of the year and 25% thereafter.

Jul 26, 2009 10:57 AM
Reply.com Marketing
Reply.com - San Ramon, CA
Thomas - this is Brian Bowman, Chief Marketing Officer at Reply.com. Please let me assure you, we validate our leads with industry-leading processes: - we have over 2-years running real-time, Targus lead validation and every lead is scrubbed - standardize addresses, corrects mistyped info, and appends missing contact data when available - verifies accuracy of individual data elements including name, address, phone number - confirms when possible that individual pieces of contact info belong together and relate to the consumer submitting the lead - improves the likelihood that all accepted leads are actionable - consistent implementation across all acquisition sources and channels Even with all of that - no automated system is perfect. So we do offer credits for invalid leads. Lead Credits will be given for the following reasons provided they are submitted within 72 hours of being sent: a. Invalid name b. Invalid phone number c. Invalid e-mail address (only IF the phone number is also inaccurate) d. Duplicate lead from Reply! e. Minor under the age of 18 f. The lead is from outside of your requested sales territory g. The lead is from another real estate agent testing the system Brian
Jul 27, 2009 06:37 AM
Bob Bloom
Keller Williams Realty - Vancouver, WA
Wow.... There must be a better way than to sift through that much junk to get a sale. I think I'll keep working my database.
Jul 27, 2009 07:00 AM
Chris Olsen
Olsen Ziegler Realty - Cleveland, OH
Broker Owner Cleveland Ohio Real Estate

Easy come...easy go...A realtor and his/her money will soon part ways!  I used Reply! several years ago and it was an unmitigated disaster.

Jul 27, 2009 10:04 AM
Gene Ward
Area Pro Realty - Danville, CA
Gene Ward
I purchase leads for 6 months. Did everything right, followed up by phone and email. How successful was it? For the lead seller it was very successful, they made 3,500 dollars. Me? I got nothing. With my experience and what I've read in AR, you couldn't sell me a lead holding a gun to my head.
Jul 27, 2009 10:24 AM
Kris Wales
Keller Williams Realty - Lakeside Market Center - Macomb, MI
Real Estate Blog & Homes for Sale search site, Macomb County MI

I must admit, you guys and gals at Reply are brave for opening up this conversation again :-)

Jul 27, 2009 10:55 AM
Bonnie Vaughan
Scranton, PA
CNE SFR - Buyers/Sellers - Lackawanna & Surroundin

I worked leads when I was with another agency who partnered with Yahoo nationally. The fee for those leads was a percentage of the closed sale. Nothing up front.

Eveyone of those people filled out a form and stated they were either buyers or sellers. It was required on a landing page.  I worked hundreds of them for months.  End result.  One listing that expired and one sale.  Hours invested - PRICELESS!

I'd rather have root canal without anesthesia than try anything like that again.

Jul 27, 2009 12:15 PM
Lanre-"THE REAL ESTATE FARMER" Folayan
ERNAL REAL ESTATE GROUP with Samson Properties - Bowie, MD
I don't make promises.I deliver results.SOLD HOMES
I agree with Kris. I thought after yesterday that your guys would not be back here again. Bonnie- I can definitely relate to your experience-TRUST ME. I just got a call today from somebody at www.USHUD.gov trying to make me a exclusive real estate agent in my area. Has anybody ever heard of them?
Jul 27, 2009 12:34 PM
Greg Nino
RE/MAX Compass - Houston, TX
Houston, Texas

Brian & Reply dot com people,

Leads are leads no matter where you buy them. The real test is the agent working those leads. There isn't a lead generation company that hasn't been publicly roasted. It's part of your business's model. 

The problem with the approach on this post is that you guys are being attacked and the (Chief Marketing Officer) is spraying the fire with the tone of "If leads aren't right for you." This comment is condescending and misplaced. Why not offer an apology to the agents who have expressed their displeasure from your services? I didn't see the word "sorry" once. It's as if .. you guys don't have to.

1/2 your blog is about price, money, costs and so forth. Realtors probably would respond better to a more friendly introduction with examples on how you can succeed. Just how do you help Realtors? What are the tools? Do you offer training, coaching, webinars or anything else? Will I be flying solo with your product?

This is your blog, your company. I'm just expressing my opinion.

I hadn't formed an opinion of Reply! and I still don't have one with regard to the quality of your leads. I do wonder if your CMO should be working on larger projects besides standing on the front lines taking fire from past customers. It just doesn't look so pro.

Good luck

Jul 27, 2009 02:23 PM
Christianne O'Malley
Dickson Realty - Reno, NV
Exceptional Service - Delivering Results in Reno!

I think again Reply has created something that does not look transparent. Again, the agent has to pay for leads that you already know won't materialize. You are only expecting 2-10 out of every 100 leads to generate business.

As Greg mentioned, you never once apologized for the difficulty in canceling your service when we made the decision to cancel because the leads were not good.

I know you don't scrub your lists either because even though I've been asked to be removed several times, I keep getting calls. I'm just not impressed.

Try another angle. Make it a simple referral, pre-qualify the leads, and go from there. Don't give us garbage and we won't fling poop at you.

Jul 27, 2009 04:19 PM
Brian Brumpton
Keller Williams Boise - Boise, ID
Boise Idaho Real Estate

What's funny is I said the exact same thing Greg did in the very first comment on this post.  The whole tone of it sounds condescending and they deleted it.  I'm thinking this post was a mistake on Reply's part. 

Lead companies should learn, you can shear a sheep many times but only skin him once.

Jul 27, 2009 04:37 PM
Reply.com Marketing
Reply.com - San Ramon, CA
We always appreciate feedback and have heard a lot of what doesn't work about online marketing. I am wondering, from your collective experiences, what does work? How are you driving profitable consumer acquisition to your websites?
Jul 27, 2009 05:08 PM
Greg Nino
RE/MAX Compass - Houston, TX
Houston, Texas

Mister Reply,

Since 2006 I've worked over 3,000 leads that i've paid for with Market Leader, previously known as House Values. That's a lot of money they've made off of me. In that time I've made just over $400k in commissions. I know a thing or two on "how to convert." I'm better than most that try. In fact, I'm damn good at it because I kill the leads until I get a a response and I relentlessly follow up until the lead/prospect responds, period.

This isn't about  my websites. It's about  me not having the time to generate my "own" leads. This is why I'm willing to "pay" for leads. If I could generate my own leads I would. But I don't. The great thing about your major competitor is that they are professional, consistent and never full of it, not to me. I pay for X amount of exclusive leads and I always get more. If I have a problem they come running. They don't play games with my inquires, not once.

My advice to you is to you hunker down, keep to your promise and never bullshit a Realtor. You'll end up in our review mirror otherwise. Most "sales" types for lead generators pretend to know what works. This is their first mistake. They have ZERO idea what works in the trenches. We Realtors despise being sold to. Give us the facts, the price and the tools. A little support, education and respect goes along way. It appears you folks have some damage control to do here. I hope you do that for your sake. Take care folks. I just might give you a call one day.

Jul 28, 2009 06:06 PM