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Is Buying Real Estate Leads Worth It

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Is Buying Real Estate Leads Worth It?

Lead Profit Margin

To determine if buying real estate leads is worth it, it all comes down to your profit margin. No matter if you want to buy seller leads or buyer leads, you must determine how much you will make in a successful transaction and subtract that by how much it costs to get a conversion from the leads. Let’s look at an example to break this down further.

Realtor Leads Example

Let’s say you are a real estate agent and your niche was vacant properties. The average sales price for your market is $500,000.00 and you typically get at least a 2.5% commission for every sale. As a result, your average commission is $12,500.00 before all expenses.

To assist you in finding vacant properties, you buy a list from a third-party vendor which provides you with 100 vacant houses per month. The cost for this vacant properties list is $500 per month. Unfortunately, the list that you buy only provides you with the address of the homes so, you have to take your marketing efforts a little further.

You then pay a postcard company $400 dollars per month to send cards to your vacant property list. As a result, your total marketing expense is now, $900 dollars per month. Without getting too technical and including the cost of broker fees and phone bills, we’ll assume $900 is your final expense cost.

Last but not least, we must then determine on average how many months it takes to get a conversion or transaction closed on a vacant property from your list. This is where things can get tricky if you are new. Unfortunately, if you’ve never completed a deal before, you won’t know what to calculate here. However, let’s use three months for this example.

So, three months of marketing to vacant properties will now increase our expenses to $2,700. This was determined by calculating the $900 marketing expense times the three since it takes that many months to complete a transaction.

Now we can finalize the profit margin. Since our average commission is $12,500 and our average cost is $2,700.00 then, we can simply subtract the two. $12,500 – $2,700 is $9,800. So with this example, it would be worth it to pay for leads since you could make a profit of $9,800.

On the other hand, using the same example, let’s say it took you one year to finally get one transaction completed. Now you looking at a marketing expense of $10,800. So we would calculate $12,500 – $10,800 which brings us to $1,700. Although this calculation does generate a profit, it may not be worth waiting a year and definitely would not support a typical lifestyle for the average person.

In conclusion, buying real estate leads can be worth it, but you must understand your metrics to determine if it is a profitable marketing expense or not.

Real Estate Lead Generation for Real Estate Agents

Are you a new or experienced Realtor interested in generating more leads for your business by using social media? Click here to learn more about how you can find buyer leads passively by using Facebook Ads.

Family Home

Buyer Leads Meaning

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Buyer Leads Meaning

What are Buyer Leads?

As a Real Estate Agent, a buyer lead is a person who is interested in buying a home. This person can be a friend, family member, or someone you just met. Regardless of the method of meeting, if you are a Realtor who primarily wants to help buyers then you will need to have buyer leads. Let’s dive into buyer leads a bit more with detailed explanations.

Buyer leads are important to Realtors for Two Reasons

  1. The Realtor could represent the buyer to purchase a home
    1. As a Realtor, you typically make the most money by either listing a home for sale or helping someone buy a home. If you are a Realtor that likes to show properties and help families find their ideal home, then buyer leads will be your marketing focus.
  2. The Realtor could help the buyer purchase their listing
    1. On the other hand, if you have a home for sale also known as a “Listing”, you will still need a buyer to make the purchase. Typically when a home is listed on the market, an agent from the same or different brokerage may have a buyer for you.
    2. However, as the listing agent, you can still bring your own buyer to the transaction without the help of any other Realtors. As a result, a listing agent could still have a use for buyer leads.

Examples of Buyer Leads

  • Renter
    • A renter is a buyer lead because typically, everyone has a natural progression in homeownership. First, you live with family, then you live on your own by renting, then eventually, you are prepared to buy a home.
    • As a result, renters are one step away from homeowners and will like appreciate the assistance of a Realtor, especially if it’s their first time buying a home.
  • Pre-Qualified Buyer
    • A pre-qualified buyer is someone who already spoke to a bank or lender and has been approved for a mortgage loan. As a result, pre-qualified buyers are some of the best leads because they show that they are serious about taking the next step into homeownership. Moreover, it is an achievement in itself for families to qualify for a loan.
    • The best part about pre-qualified buyers is after you both agree to work with each other, you simply have to help them find the ideal home. Unfortunately, this can be a process that takes a year or as little as one day.
  • Unqualified Buyer
    • The unqualified buyer is someone who has an interest in buying a home but they don’t have the money to make an all-cash purchase and they don’t know if they can qualify for a loan.
    • When you have an unqualified buyer, the next step is to help them find a bank or lender to apply for a mortgage loan. Once the application is complete and processed, the buyer can find out if they are now “Pre-qualified” or need to accomplish a few tasks to be approved by the lender.
  • Random Person
    • Lastly, a random person you meet can become a buyer lead. As previously stated, you may not know what stage anyone is in with their living situation. As a result, anyone you meet can be interested in buying or selling a home.

Real Estate Lead Generation for Real Estate Agents

Are you a new or experienced Realtor interested in generating more leads for your business by using social media? Click here to learn more about how you can find buyer leads passively by using Facebook Ads.

Realtor with a family.

Real Estate Leads for New Agents

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Real Estate Leads for New Agents

What are Real Estate Leads?

For real estate agents, leads are contacts or people who have an interest in making a real estate transaction. Depending on the type of real estate you transact, leads can be buyers, sellers, or renters. For this blog, let’s provide some context on buyer and seller leads for those agents just getting started in the business.

 

Different Lead Types

  • Sphere of Influence
    • The first and most common lead type realtors are introduced to is their sphere of influence. These leads are your family, friends, and those who already may know, like, and trust you.
    • This lead type is usually recommended first because you already have some sort of relationship with these people thus, you can simply reach out to them to see if they have any real estate goals; in this case, an interest in buying a home.
  • For Sale by Owner
    • Next, the For sale by owner, also known as “FSBO” is a homeowner who is attempting to sell their own home without an agent. For one reason or another, this homeowner wants to sell their home but they have decided to not get professional help from a Realtor.
    • As a result, FSBO’s are leads because they have already shown that they could use the services of a real estate agent but, you will first have to find out what it would take for them to work with you.
  • Expired
    • Expired leads are homes or sellers who were once on the market but failed to attract a qualified buyer. As a result of the time period between the agent and homeowner lapsing, the contract expires and the property is removed from the market by the broker.
    • Since the home failed to sell, the expired listing or owner becomes a lead because they still may be motivated to sell. This can be a very good lead because you already know the owner is willing to work with an agent but, for some reason, the home didn’t sell.
  • Canceled
    • Similar to expired leads, canceled leads are properties that left the market likely prior to their term period. For one reason or another, the owner wanted to remove the home from the market and not sell it.
    • This is a lead because the owner could want to sell again in the future and they may not want to work with the same Realtor. If you know how to skip trace the owner’s contact information or contact the previous listing agent, you could ask some questions to find out if there is an opportunity for you to do business.
  • Vacant Properties
    • Vacant leads are properties that do not have anyone living in them. Since no one is living in the home, the vacant house could be a hot lead for Realtors looking to find new business.
    • Since the home is vacant, you would simply need to contact the owner and find out if they were considering selling and assist them with the process. The good news is, that the home is already empty and ready for showings.

Real Estate Lead Generation for Real Estate Agents

Are you a new or experienced Realtor interested in generating more leads for your business by using social media? Click here to learn more about how you can find buyer leads passively by using Facebook Ads.