Buying Leads or Investing in a Client Base?

Real Estate Agent with Kansas City Regional Homes

I know that I am at risk of being "flogged" by my entire community with my next topic.  But, here I go anyway.  It seems that many of you are very negative about what you call "Buying Leads" and the "Tele-marketing" agents as you so lovingly refer to them.  I have said many times in some responses that not all lead generation companies are created equal. 

First let me begin with my personal story about my first year in real estate.  My wife is the one who actually encouraged me to go into real estate.  I was very against it because I said to her "how am I going to sell real estate, I don't really have a large circle of friends and neither of our families live here?"  She quickly reminded me there are many ways to skin a cat.  She had already been doing the research on how Realtors find clients.  (Google is a wonderful thing, by the way.)  Of course, as I noted in an earlier article, all the paid sites came up.  There were many types of real estate lead generating ideas.  She did her research and after a week or so decided which one we were going to subscribe to.  This decision was the best decision we made!  For a new Realtor it is a way to start right out of the gate getting leads from the Internet. 

Second, I will say research, research, research.  Do your due diligence on the company before you ever sign up with them.  She actually got agents that were already enrolled in other states and called them off of their sites.  She did not submit the form to get their attention.  This is the worst thing you can do because you are costing your fellow Realtors money if it is a click or pay-per-lead service.  Please don't do this to your fellow agents.  (We're all in this together trying to make a little money.)  You will find that if you can get the name and phone number of these agents they are usually very happy to share their experiences.

Lastly, I would like to say that I have built 98% of my business from Internet leads.  It isn't much different then what you are doing using this network.  I no longer use the first service that I subscribed with.  My wife currently has learned how to reproduce the same result at a much lower price.  She also does this for a couple of other Realtors in our office so they can get leads as well.  I can tell you that the success from the Internet leads really depends on the person making the calls.  It takes patience and determination to follow these leads.  It is a well known fact that it can take six months to a year for some of the leads to come to completion.  But, the other side of that is that I have had leads that took only weeks because they were pre-approved, ready and had to move because they were relocating!  I sold $2.4 million in real estate in my first 6 months.  I made the Million Dollar club for selling over a million in one month and was the number three agent in my office.  I know that some of you from other areas (e.g. California) might not think that is a lot of volume but please remember we are in the MidWest.  Our average sales are less than $250,000 each.  I am now starting to reap the rewards of repeat clients and all of it because of the Internet and investing in myself.

My hope with this article is that a new agent reads this and sees that not all experiences using help is a waste of money.  I have not wasted money buying leads, but instead look at is as I have invested in a "CLIENT BASE".

Of course, the old adage, you have to spend money to make money still holds true.  I'm lucky in that I had a little bit of money to spend because my spouse has a steady paycheck.  (Having some room on the credit cards never hurts either.)  But I am still here after 3 years, still making money (this is probably going to be my best year ever even during the slow market).  We have learned to diversify ourselves now into other real estate facets but I continue to get at least 1 high quality lead a week.

How many bonafide, have to buy within the next 6 months, leads do you get a week?




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Barb Van Stensel
Chicago, IL

HI Paul, I get two leads a week and they are from my referral base.  I struggled when first entered in the Chicago market as the family business is in Michigan.  Unlike you, I did not not have a spouse to support me and you have been extremely fortunate that way.  I am in the midwest, like you, but I believe in prospecting a minimum of two hours first thing in the morning.  Every morning for five days.  On Saturdays I have two listing appointments, one open house and then I knock on 12-16 doors of homes that have expired.  I interview two buyers a month as I am currently bringing in 4-8 listings a month.  The numbers keep growing.

I believe in leads and paying for them, I am not against them.  However, you have been smart and know how to connect with people.  Alot of agents do not understand the attraction in action series of client retention and referrals.  Most get a contract and memorize it for the next 45 days and then say,"Oh, I need to work on another deal."

I believe in balance and the leads that you pay for should be considered gravy to your mashed potatoes.  You understand how the system works.  Most struggly agents do not.  I guess the best way to say it is like "goolosh" - a little of this and of that and when you mix it together and the ingredients/prospecting is balanced, one awesome real estate business!

Thank you for the post and your positive attitude.  Oh, btw, congrats!


Aug 03, 2008 05:00 AM #1
Justin Ukaoma
Vizion KC - Kansas City, MO
Kansas City Real Estate Investments

We just started selling our rental leads and I have been surprised how many of them who buy them find qualified tenants. Agreed, you do have to put some time in working with the leads so I would not recommend this to everyone. However for the folks determined they can easily find a great client base.

Aug 03, 2008 05:36 AM #2
Cindy Marchant
Keller Williams Indy NE 317-290-7775 - Carmel, IN
"Cindy in Indy" , Realtor, Fishers Real Estate

I think there are some "buy client" programs that work fairly well.  I know Homegain has been discussed frequently and dont' want to get into that again but to say in my beginning years, it worked well for me.  I would say we closed 6-8 that first year from that program.  I joined a BNI group and it has been fabulous in networking; they only allow one profession per group so I am the only realtor.  I have closed five in the first fifteen months on that.  I still am a huge advocate of "who you know" but you're right, sometimes a realtor doesn't have that luxury.

Aug 03, 2008 05:42 AM #3
Katie Landon Lewes
Jack Lingo REALTORS - Lewes, DE


I have been in the business since Sept 2002 in  a new area where I knew very few people.  I did not do the research your wife did for (that is awesome) I struggle for the first year or so and then I was rescued by a small local firm that offer me a position on a New Construction site.  I ran and never looked back.  It was the best move for me.  I did very well and I spent almost 2 years there and made some wonderful friends as well as repeat clients that I just adore.  When the market began to slow down I got alittle nervous (although I had a good base) I need more buyers/sellers so I subscribed to House Value's.  I paid a monthly for for a particular zip code and within 10 miles (where I live that is alot).  Anyhow I did that for about 2.5 years and do to decline in the market recently canceled and am wondering if I did the right thing.  I had some great leads come in.  In fact I meet several people and sold several homes. 

I am not in a financial position at the moment to join again but will probably do it again in the future.  I am in the processing of getting re organized to see what I have and don't have at this time.  So I wish you all the luck in the world!!!

Aug 03, 2008 05:50 AM #4
David Slavin
Keller Williams Premier - Katy, TX
CDPE, ABR, SRES Keller Williams Premier

I haven't tried any of these lead generators.  There's an agent in my office that does and he is very successful but he said you really have to work them since most of the leads are bad.

Aug 03, 2008 06:20 AM #5
Sara Homan
Coldwell Banker Ellison Realty 352-209-4044 - Ocala, FL
Realtor, Homes, Farms & 55+

Paul,  Unlike you I have not had the greatest success with lead generators.  I would like to know more about what you are currently doing.  I get so many companies calling me, I just don't know who is for real and who is eating my lunch!  Help!!!

Aug 03, 2008 06:21 AM #6
Paul Jones
Kansas City Regional Homes - Olathe, KS
PIC Properties - Kansas & Missouri

Barb:  That is great!  Sounds like you do an Awesome business.  I am trying to diversify my business each day that goes by.  However, with my family (four children, two grown with families and two younger boys 14 and 11) and all the activities that go with it, I can't imagine doing what you are doing for your business.  There would be no way I have the number of hours required to go door knocking.  More power to you though I wish I did.  I am the one that is always hesitant to try new things.  My wife is the organizer and pushes me to do more and more and more.  I am just not as good as her with the multi-tasking.  Way to go!!

Katie:  I thought about the new sub-division avenue in my first year.  I just never received the opportunity.  My step-daughter filled in at a couple of the new subdivisions South of Olathe, but she never found it to be beneficial for her, but she got in during the downturn in the market.  She is now with Re/Max and trying to do things the old fashioned way.  Good luck and make a budget.  Put money aside from each transaction to re-invest in yoru self.

Cindy:  I agree that not all are created equally.  I have been approached in the past to join one of the professional networking groups, but I never did do that.  I just felt it was to new for me.  I am glad to hear that it does work.


Thank you all for your comments and I hope you will stop by and read some of my other blogs.  Like Do You Run Your Real Estate Business Like You're Working at the DMV and What made me think I could be a Realtor


Aug 03, 2008 06:31 AM #7
Michael Shankman
Award Realty - Las Vegas, NV
Selling Las Vegas 702-498-3383

I get all my leads from the internet-craigslist and from past clients..

Aug 03, 2008 06:44 AM #8
Aaron Fox
Century 21 Looking Glass - Grand Ledge, MI

Paul I have tried several Lead generator services, I am long time subscriber of two. I thnk there has to be a balance between paying for leads and referral base. As long as agents follow up and keep in touch with past clients Internet Leads are a great way to start.


Aaron Fox                                                                                                                      Century 21 Looking Glass                                                                                              Website-                                                                               Email-                                                                                     Phone- 517-404-0050

Aug 03, 2008 07:27 AM #9
Paul Jones
Kansas City Regional Homes - Olathe, KS
PIC Properties - Kansas & Missouri

I couldn't agree more Aaron, I am hoping that it will come full circle.  I have had one client already that has bought and sold through me.  Of course, I have only been doing this for a little over 2.5 years so I am hopefully that all my Buyers agent work will reap the rewards in the upcoming years.


Aug 03, 2008 07:33 AM #10
Adele Irving - Easton Area Homes
Prudential Patt, White Real Estate - Easton, PA


I'm thinking about signing up with Homegain. I used them before when the market was hot and I got many good leads that were ready to buy. It was great!  When the market slowed down, I didn't do as well.  But I've been thinking back and I think the problem was that I didn't have a system to follow up with people who will buy in the future.

Do you have any tips on how you keep a relationship with a lead that is going to buy later, rather than right away? What system do you use to keep things going, so that when they are ready to buy they use you.?


Aug 03, 2008 11:07 AM #11
Paul Jones
Kansas City Regional Homes - Olathe, KS
PIC Properties - Kansas & Missouri

Yes, we use Homegain for their advertising.  We have our own lead capturing web front that my wife has designed.  This proves to be a very good investment and cost effective.  Of course you have to have someone who is tech enough to maintain and create.  As to the second half of your question, I use my phone.  If they say call them in a month, then I call them in three weeks reminding myself with my phone.  I make phone calls each and everyday.  Also, I have a drip system that automatically sends out emails to these clients based on their situation.  First time home buyer, relocation, etc. it works well.  I think the most important is that personal contact.  I have had people who have said they are not ready to buy for six months and then next time I call them they say they want to go look at a house. 

Aug 05, 2008 01:41 AM #14
Larry Bettag
Cherry Creek Mortgage Illinois Residential Mortgage License LMB #0005759 Cherry Creek Mortgage NMLS #: 3001 - Saint Charles, IL
Vice-President of National Production

Paul...I"m really interested in lead buying...I should say that I'm really interested in successful lead buying.  However, I do know that investing in your own database is the gold that you're looking for.  Just last Friday I had an incredibly successful client apprection party.  I do so well with those.    Client Appreciation Party Was a Blast!!!!  Your best bang for the buck are the client database investments b/c raving fans are so much more worthwhile than the commodity of a list.  But I'd still love to see a lead buying service that actually works....I'm intrigued.

Aug 05, 2008 02:04 PM #15
Not Yet Licensed

I can tell you that the success from the Internet leads really depends on the person making the calls.  It takes patience and determination to follow these leads.  It is a well known fact that it can take six months to a year for some of the leads to come to completion. 

Good evening Paul,

Thank you for sharing your success story.  Those are all excellent points.  Some agents make the mistake of expecting instant gratification from internet leads.  That's not usually the case.  In fact, I've heard of several transactions that took longer than a year - especially when you're working with upscale buyers.

Aug 05, 2008 05:33 PM #16
Paul Jones
Kansas City Regional Homes - Olathe, KS
PIC Properties - Kansas & Missouri

Oh, you are so right.  In fact I am going out again (third time in a year) with some clients from Hong Kong.  It has been a long time coming.  It will be almost one year since my first contact with them.  I am hoping that this visit will bring them success in the hunt and they will finally buy their home.  I have many more stories of my leads that have been around for a long time.  But, like I have said on the flip side you can get a phone call and the next day they are looking.  It all just depends on the readiness of the lead.

Aug 05, 2008 05:43 PM #17
Not Yet Licensed

It will be almost one year since my first contact with them. 

Hi again Paul,

That's outstanding.  I hope you find them a new home this time!  One of the biggest mistakes I see some agents make is to let their good, profitable long term buyers fall through the cracks because they get too busy servicing their short term clients.  What follow up software are you using to stay in touch with your longer term buyers?



Aug 06, 2008 02:45 PM #18
Norma J. Elkins
Elite Realty Group - Morristown, TN
Realtor - Elkins Home Selling Team

I am interested in knowing what company do you use for lead generators?  Please post some names if you can - thanks!

Aug 06, 2008 02:59 PM #19
Paul Jones
Kansas City Regional Homes - Olathe, KS
PIC Properties - Kansas & Missouri

Not yet Licensed:  I use my Re/Max site as well as I use my phone to remind me when to make another call.  It works good.  I had a difficult time in the beginning keeping everything straight.  My wife yelled at me enough that it finally sunk in.  Not to mention she is the one that bought me my Treo.


Norma:  My wife is my lead generator.  She designed the site and advertises it.  She is AWESOME!

Aug 06, 2008 03:34 PM #20
April Hayden-Munson
Brookfield, WI
Brookfield Wisconsin Real Estate

Paul - Each to his own!  I also subscribe to paid leads.  More than 50% of my business this past 2 years have been from the leads.  Some take time to mature, some purchase or sell quickly.  The most important thing to me is getting in touch with the "lead" on a personal level, whether it is by phone or e-mail if you don't have a telephone number!

Aug 09, 2008 06:46 AM #21
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PIC Properties - Kansas & Missouri
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