Best Lead Sources

I personally have spent well over $2 million in my career on leads. They are expensive, but ultimately, they are an investment in yourself and your business.

Some lead sources are better than others. Others convert higher than others, while others may cost less.

It’s about creating a strategy. Give that strategy some time, and stay consistent.

So, let us talk about a lot of lead sources. Let's talk about the pluses and minuses. And then, in the end, I will talk to you about how I built my company and where I saw my success. We will also talk about the lead sources that I found to be an absolute waste of time. And I will also give you some of my biggest advice that could have saved me a ton of money if I had just followed it over the years.

Let’s start off with the less expensive lead sources that are ultimately great at getting your business started and growing.

The free lead sources are great, but the issue is that they really can’t be scaled. So ultimately, they really are not free because they suck up your most valuable commodity, your time.

The easiest one is open houses. Oh, you don’t have any listings? Well, then ask a top producer if you can host the open house. Top producers generally HATE open houses. It’s a win-win for everyone. I have noticed, at least in our market, that fewer and fewer buyers come in the door unrepresented, and the opportunity of the open house has diminished. But there are still some great opportunities there!

Using your feet and doorknocking. This is another freebie—well,  almost a freebie, as you should really have some type of literature to leave behind with the property owners that you doorknock. Target a neighborhood around a listing that your firm has listed and knock on the door. Let neighbors know that your firm sold the house and ask them if they have any questions about the current market conditions. I can promise you that you will get some doors slammed in your face. But if you come from a place of contribution and care, then you will make some great contacts that sooner or later may just become a great source of business. Again, the negative is that this is very time consuming. And you may need to buy a new pair of shoes rather quickly!

Let’s round out the 1980s Century 21 ‘Get Your Real Estate Career Started’ playbook! And that isn’t a knock on Century 21. Just a nod back to the old days.

Expireds and For Sale By Owners or FSBOs are another lead source. Now you could bootstrap this one to be low cost or you could make some investments into software that will help you leverage your time and ultimately make more contacts in a shorter period of time. There are many lead aggregator companies out there, but ones that jump to mind are RedX, Vulcan 7 or Espresso Agent. Again, the positives are that this is a relatively inexpensive lead source with a lot of potential. The negative is that every new agent has been given the same playbook and there are an infinite number of agents calling... And the more experienced ones can ultimately have a good leg up on the competition. But know that people have built their businesses on these two lead sources alone.

You know what, let’s throw probate into this mix as well. There are probate lead aggregators out there that you can buy too. Just like expireds and FSBOs, you can cold call probate leads too.

And you can also compound your return for all three—expireds, FSBOs and probates—by also sending them mailers. If you were to add sending mailers into the equation, then you are obviously going to start to see your expenses begin to increase beyond the cost of just the platform.

And then there is just general cold calling. Again, you will need a platform for the data. But you can call around neighborhoods to tell neighbors about a newly listed property or a property that your firm has put under agreement. Warning to the wise. Pay attention to the Do Not Call list. Those fines or lawsuit demands will add up.

Then there are the referral companies. These are great opportunities. But while they are free in the beginning, they are technically one of the most expensive lead sources out there. Essentially, what these referral companies do is run ads to get a buyer or seller lead and then refer them off to the agent. These referral fees that they can demand can range from 30 to 40 or 50 percent. These leads will be sporadic. You won’t necessarily get a consistent flow. These leads will go out to multiple agents, so you will be in competition. And you will need to provide constant updates to the referral companies. Examples of these lead sources are Referral Exchange, Homelight, Opcity, Upnest and OJO.

Another no cost lead source is YouTube. Well, it is free to post content, that is. Getting the equipment to film and edit the content obviously takes a little capital. But the biggest drain on resources with this lead source is your time. But this can be an amazing resource, and you can create evergreen content that could bring you leads years down the road. It’s a lot of work. You need to be consistent. And you need to give it a lot of time.

Alright, let’s start talking about the lead sources that allow you to scale your business. I don’t believe that a person can truly scale their business without paying for leads. Yes, they could easily become $100,000 producers. No doubt. But when I say scale, I mean a quarter, half or millions of dollars in revenue.

The least expensive place that you can buy leads is on social media sites like Facebook. You can very quickly fill a database with these leads. But these leads are generally higher up in the funnel. I have found that the sweet spot is about two years from origination to transacting for the thousands upon thousands of Facebook leads that I have bought. In other words, this is a long-term play. This is not an immediate gratification lead source. And it needs to be worked on. Your CRM should be on point. And this timeline does make sense, right? Think about how you get a Facebook  lead. It’s from someone scrolling, seeing an ad and clicking it. It’s passive lead generation. What I mean by that is that the consumer isn’t taking any intentional action. A lead simply got a pretty ad put in front of them that piqued their interest and clicked it.

And then there are Google or Bing pay per click (PPC) Leads. Now these leads will cost more than Facebook leads and are ultimately considered a higher quality lead than Facebook. And that makes sense. Remember how I was just talking about how Facebook leads are passive? Well, PPC leads are the direct opposite. This is a lead from someone who went to Google and typed in a very specific phrase. Like Boston Homes for Sale or condos for sale near me. Google will give a response to the search question with three sponsored links as the initial results. These sponsored links are PPC. If the lead clicks on one of the sponsored ads, then you pay for that click. And you hope that the lead funnel that you have in place on your website will be able to capture that lead. Did you catch that? On your website. So you are not only paying for the click and the lead, you will also need a high quality and high conversion website. These leads are longer term nurture leads. There will be some that will convert sooner, but the real return on these leads is as they hit a year to a year and a half. If you nurture them, then there is a fortune to be made here.

And now we will talk about organic leads. You are probably wondering if you would put organic under Facebook and Google leads. I don’t know. It just seemed right. Because organic is a ton of upfront work. Yes, I guess you could do this yourself if you know what you are doing. But most people hire someone to do the search engine optimization. It can sometimes take months or even years to see a result. There is no guarantee. So, it’s a big investment, but the reward can be enormous. I will use my website as an example. Currently, I am receiving a little over $9,000 a month in “free” traffic. This is down from close to $11,000 a month in “free” traffic a couple months ago. The hard part of organic leads is that you don’t really have a lot of control over what you rank for. I get a lot of leads that are outside of my service area. Which do turn into great referral opportunities!

Then you have companies like Ylopo that offer a front-facing website and then drive traffic to the website by using Google PPC and Facebook. They will charge you a platform fee plus the cost of the leads (obviously). A company like Ylopo is more than just generating leads; they have things like artificial intelligence for text follow up. It’s a better solution for folks who may use a CRM like Follow Up Boss and don't have a front-facing website that is tied to their CRM.

Real Estate portal leads like ZIllow, Realtor.com, and Homes.com are at the top of the most expensive lead rankings. These leads are more expensive because they are generally closer to the bottom of the funnel. These are leads that haven’t typed in Quincy Homes For Sale; they actually went on the website to look at homes. While browsing a bunch of houses, they found one that they liked and hit that “request more information” or “schedule a showing” button. Again, these leads are VERY expensive. If you don’t have a proven follow up process and aren’t a dog with a bone when a new lead comes in, then these leads are not for you. How expensive, you ask? Well, it depends on the area. As a great example, recently I saw that a single lead was $1,500 in one of the most expensive neighborhoods in Boston. Like I said, expensive. Lower funnel leads are more likely to buy the house they request a showing for, as they typically have a shorter lead origination to purchase cycle.

Farming a neighborhood or neighborhoods can be very expensive, and it can take quite a while to garner a return. But the longer you do it, the bigger the return. There is a recipe for success when it comes to farming. It’s called monthly. Anything less will just mean that you are ultimately throwing your money down the drain. And expect it to take 12 months for you to break even on the farm. But if you can make it through that first year, and if you can stay consistent and continue on the path, then this can become a gold mine of business for you. I have this as one of the most expensive lead sources because, in the beginning, the cost is aggressive, and there is a lot of hope and praying as there are few ways to know if the advertisements are making an impression. And keep in mind that there is a lot that goes into a farm before you even send out the first mailer.

Then there is radio and TV, and I guess we can throw in advertising on podcasts in today's world. I’ve done radio and TV advertisements but have never done podcasts. The issue that I see with podcasts is that the advertisements are not local. The cost of these lead sources will depend on the market. I am in the Boston market, which is one of the most expensive advertising areas in the country. Painfully expensive. This is another long-term play. Whatever the monthly budget is, you need to have the means and the discipline to at least give it six months. And the budget needs to be big enough to ensure that you are getting enough impressions. One commercial, once per day, will not cut it. You need to flood the airwaves, especially in the beginning. I was spending more than $20,000 a month on some TV advertising, and I failed. It was because I couldn’t get enough impressions to imprint my message on the consumer. It was hard to do when each spot cost $750! The returns from these lead sources can be slow. They are expensive, but once you have gotten to scale, and once you have gotten to a point where you have penetrated the market where the consumer knows who you are, then that’s when it becomes a lot of fun for a marketer.

I started in a new market where I did not have any sphere of influence. So, I had to utilize a lot of these lead sources that I have talked about today. At this point, I really think I have pretty much covered all the different types of lead sources. Maybe not every company, but every type.

In the beginning, I really got my start with a good CRM and Craigslist. I would post Craigslist ads and get leads, which I would put in my CRM and start sending them houses. Today, Craigslist isn’t what it used to be, but there is a lot of opportunity with Facebook Marketplace! My expenses in the beginning were a CRM. That is it. Man, those were the days!

From there, it gave me the capital to start investing in my business in a more predictable way. I moved to Google PPC leads. Then Zillow leads, Realtor.com leads, and then Facebook leads.

My business today looks a lot different from what I started with. My lead generation has morphed into a lot of organic leads through Google and Bing plus YouTube. I do some Google PPC, but am now spending more money on seller lead generation than buyer lead generation as my database has grown to over 30,000 leads.

I also did a lot of farming in the beginning. And I was very successful with that!

I don’t use Zillow anymore. They are extremely expensive leads. I believe you can make the numbers work if you are getting 100% of the commission. But it begins to get a lot harder when you are splitting it 50% with a buyer agent. I found that a lot of times I was breaking even, and if I was lucky, then maybe I would have a 1.5 times or 2 times ROI.

You can’t build a long-term successful business on a 1.5 times return on investment. It’s just not a great use of your business capital.

I find that there are a lot of agents. And I don’t just think it is agents, it’s all business people who are chasing the next best and greatest thing. But in our world, there are a million companies that are barraging us each and every day for the next best thing... And we agents chase these shiny objects.

I cannot begin to tell you how many times I have signed up for a service because another agent, who is a friend of mine, signed up and told me how amazing the new company was. Here is some of the best advice I can give you. When that agent has just started the service and says it’s the greatest company since sliced bread, it will make them rich, thereby making you rich. Then say that it sounds good. Tell them you will take a look. Write it down in your calendar to check in with that friend in about 6 months. At that time, ask them how it’s going. Ask them what their experience has been and, most importantly, what their return on investment is! This advice alone will save you a bloody fortune. The number of squirrels I have chased over the years... Ha, Realty.com alone, that was a $60,000 plus chase!

Another piece of advice is to pick one source and master it. Once you have mastered it, go on to the next. Don’t have 10 lackluster lead sources. Commit and dominate.

And then… If it works, don’t stop doing it. As I was putting all of this together, I started thinking about my farm and asking myself... Why the heck did I stop doing it? It was producing a positive ROI! It wasn’t the most amazing ROI, but I can’t begin to imagine how incredible it would be if I were still doing it today. If you are having success, then stick with it. Optimize it. Squeeze a bigger return out of it. Then move on to the next thing only when you have truly maximized it.

A good chunk of my database is made up of Facebook leads. I can remember the months that I delivered more than 1,000 leads. It was crazy… I think the most impressive thing was that my systems held up. Systems are so important. Because lead generation without a good system is just a waste of money and time.

The hard part of talking about what lead sources are crap and which ones are great is that different lead sources will perform differently in different markets. A great example of this for me is ZBuyer. In my market, it was pretty much 100% buyer leads. But I have friends in other markets where they get seller leads and have an incredible ROI. The big thing is to just look at how the company is generating leads. Are they basically doing Google PPC and then charging you a premium for the lead? If so, just do it directly and cut out the middleman.

I also have a general rule that I will not sign up with any marketing company that calls me. I get about 327 of these calls per week. Drives me up the wall. Be VERY cautious about a lead source that has a set time for a contract. To me, this is a great indicator that they don’t have faith in their product after the first couple months. And then, be cautious about companies that charge a setup fee. Sometimes a setup fee makes sense. But other times, I think it is just a big revenue generator.

OH and a Facebook page. It's a complete waste of time. No one is using your services because there is a pretty Facebook page. And no one searches for real estate agents by looking at Facebook pages. A Facebook group. That could be different!

Lead generation is the lifeblood of our businesses. Perfect lead generation and find the things that work best for you, and you will always keep the blood flowing.