{"id":3051,"date":"2022-04-22T13:21:46","date_gmt":"2022-04-22T13:21:46","guid":{"rendered":"https:\/\/preprod.realtrends.com\/blog\/2022\/04\/22\/ask-a-coach-do-i-need-to-pay-for-real-estate-leads\/"},"modified":"2025-03-13T02:41:30","modified_gmt":"2025-03-13T02:41:30","slug":"ask-a-coach-do-i-need-to-pay-for-real-estate-leads","status":"publish","type":"post","link":"https:\/\/preprod.realtrends.com\/blog\/2022\/04\/22\/ask-a-coach-do-i-need-to-pay-for-real-estate-leads\/","title":{"rendered":"Ask a coach: Do I need to pay for real estate leads?"},"content":{"rendered":"\n<p>There is no doubt that lead generation programs are big money makers \u2014 for those selling those leads to agents, or for brokerages getting agents to come to them with a promise of leads.\u00a0<\/p>\n\n\n\n<p>In my opinion, they are huge money- and time-suckers for agents, however. I believe Steve Murray (senior advisor to <strong>RealTrends<\/strong>) once wrote about how agents are paying on average from these sources of over $3,300 per closed lead. That\u2019s not the worst of it. <\/p>\n\n\n\n<p id=\"h-the-worst-of-it-is-this-agents-say-that-these-leads-covert-1-to-4-of-the-time-that-means-for-every-100-leads-an-agent-follows-up-with-and-nurtures-only-one-to-four-of-them-end-a-closed-deal-so-they-wasted-their-time-on-96-to-99-people\">The worst of it is this: Agents say that these leads covert 1% to 4% of the time. That means for every 100 leads an agent follows up with and nurtures, only one to four of them end a closed deal. &nbsp;So, they wasted their time on 96 to 99 people.<\/p>\n\n\n\n<h4 class=\"wp-block-heading\" id=\"h-who-do-buyers-and-sellers-work-with\">Who do buyers and sellers work with?<\/h4>\n\n\n\n<p>The <strong>National Association of Realtors<\/strong> shows clearly every year in their studies that the vast majority of sellers and buyers (well over 80% every year, sometimes closer to 90%) work with one of these types of agents:<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>Someone they know personally.<\/li><li>Someone they did business with before (same as above).<\/li><li>Someone they were referred to by someone they know.&nbsp;<\/li><li>Someone they met from a sign call or open house.&nbsp;<\/li><\/ul>\n\n\n\n<p>So, very few buyers and sellers come from lead generation programs, and I don\u2019t see that changing. It\u2019s not hard to generate a lead \u2014 companies can generate leads all day long with their artificial intelligence. <\/p>\n\n\n\n<p>But, while people will get their information from anyone, they do business nearly 90% of the time with someone the know.&nbsp;Consumers are getting smarter and more cautious about putting real information down to trade for a piece of information. Meaning that the \u201cleads\u201d generated are of poorer and poorer quality (fake names and temporary email accounts) than ever before. <\/p>\n\n\n\n<h4 class=\"wp-block-heading\">What is the solution? <\/h4>\n\n\n\n<p>Cultivate relationships with enough genuine raving fans of your work that they refer you others and do enough repeat business to meet your goals.&nbsp;<\/p>\n\n\n\n<p>I know several agents with no more than 161 VIPs generating as many as 90 transactions a year, and not buying any leads nor are they mass marketing to anyone. That\u2019s over a 50% return vs 1% to 4%. These agents simply create and follow a plan with a small group of great people and reap the rewards.<\/p>\n\n\n\n<p>Yes, they do some open houses, get sign calls and some agent-to-agent referrals, as well. But most of the business comes from that small, carefully selected VIP list.&nbsp;<\/p>\n\n\n\n<p>I did some research and discovered something called <a href=\"https:\/\/www.bbc.com\/future\/article\/20191001-dunbars-number-why-we-can-only-maintain-150-relationships\" target=\"_blank\" rel=\"noreferrer noopener\">Dunbars Number<\/a>, that says people can only maintain relationships with up to 150 people max. <\/p>\n\n\n\n<p>It\u2019s not a coincidence that so many agents, when asked to go through a list of thousands of people in their databases, and only pick ones that fit their self-identified minimum standards and are people they genuinely like and would love to do business with or receive recommendations from \u2014 somewhere in the range of 100-161. &nbsp;Our brains demand a number around that.<\/p>\n\n\n\n<p>The thought that we need to market to thousands of people to meet our goals is not true. I\u2019m working with a small group of agents to test this from ground up with a <a href=\"http:\/\/150toLife.com\" target=\"_blank\" rel=\"noreferrer noopener\">Mastermind Group<\/a>\/<\/p>\n\n\n\n<ul class=\"wp-block-list\"><li>150 of the right people. (Or less)<\/li><li>Choosing just a few of 150 possible things to do with them.<\/li><li>Working it 150 days a year.<\/li><\/ul>\n\n\n\n<h4 class=\"wp-block-heading\">Here&#8217;s how it works. Try this.<\/h4>\n\n\n\n<p>1. Identify what you want from your work both income- and time-wise.&nbsp;<br><br>2. Determine your minimum standards regarding area, price range, average income per closing, type of property, etc.<br><br>3. Go through the lists you have now to start a group of VIPs &#8211; no more than about 150, but enough that you can reasonably expect to meet your goal. For example, I have a coaching client whose average price is close to $1 million and she only keeps about 80 people in her VIPs because she doesn\u2019t want, or need, to do a lot of transactions. She\u2019d rather spend more time with her grandchildren and her hobbies.<br><br>4. Now that you have the right people who fit your goals, the next step is to create a plan to  create relationships that cause them to know, like, and trust you so much that they will recommend you to others.<br><br>5. Finally, create a calendar that supports the actions in your plan. We believe you can do it in no more than 150 days a year.<br><br>To answer your question: I\u2019m not a fan of buying leads that suck you dry both cost-wise and worse time-wise.<\/p>\n\n\n\n<p><em>Donna Stott is a real estate consultant focusing on agent and brokerage business.<\/em><\/p>\n\n\n\n<p><em>This column does not necessarily reflect the opinion of RealTrends\u2019 editorial department and its owners.<\/em><\/p>\n\n\n\n<p>To contact the author of this story:<br>Donna Stott at <a href=\"mailto:donna.stott@mac.com\">donna.stott@mac.com<\/a><\/p>\n\n\n\n<p>To contact the editor responsible for this story:<br>Tracey Velt at&nbsp;<a href=\"mailto:tvelt@realtrends.com\" target=\"_blank\" rel=\"noreferrer noopener\">tvelt@realtrends.com<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"<p>Are you paying for leads and only converting a small percentage? Even a database of 200 names can yield big results, all free, if you work it correctly.<\/p>\n","protected":false},"author":15802,"featured_media":4822,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_acf_changed":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[3255],"tags":[],"coauthors":[2577],"class_list":["post-3051","post","type-post","status-publish","format-standard","has-post-thumbnail","hentry","category-archive"],"acf":[],"yoast_head":"<!-- This site is optimized with the Yoast SEO Premium plugin v25.4 (Yoast SEO v26.8) - https:\/\/yoast.com\/product\/yoast-seo-premium-wordpress\/ -->\n<title>Ask a coach: Do I need to pay for real estate leads? - RealTrends - Blog<\/title>\n<meta name=\"description\" content=\"Are you paying for lead generation and barely converting? 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