How Much Do Realtors Spend On Lead Generation?

 

How Much Do Realtors Spend on Lead Generation?

In A Nutshell:


The amount you spend will vary considerably depending on how many leads you're looking to generate. Facebook leads can typically be generated for around $5-$10, and Google PPC (Pay Per Click) leads are in the $15-$20 range.

 
 

The Dollars and Cents of Finding Clients

How much money do realtors spend to find new clients?

The answer varies.

Your costs depend on your methods and how clear you want your potential clients to be.

Our Head Realtor in Residence at Ylopo, Barry Jenkins, shares the most common lead-generation methods:

  1. Google ads

  2. Facebook campaigns

  3. Purchased leads

  4. Open houses

  5. Sphere of influence marketing

Each method has its good and bad points.

Some cost very little, while others might take a big part of your commission.

Weighing Your Options: Cost vs. Clarity

When choosing a lead generation strategy, you need to think about two things: cost and lead clarity.

Barry explains:

"Buying leads online can really boost your business. You're paying to talk to people who've shown interest in what you offer. The cost per lead depends on how clear you want the consumer's intentions to be."

Some services wait until a lead says they want to buy within a month before sending them to you.

But they might charge you a big referral fee, up to 42%!

That sounds like a lot, but some realtors like this approach.

Why?

Because they get a very motivated client who's ready to start looking for a house right away.

On the other hand, leads from places like Facebook might be less clear.

These could be people who clicked on a listing because they liked the pictures.

When you contact them, they might not know their real estate goals.

But these leads cost much less, often around $15 each.

Scaling Up: The Tiered Approach

If you want to grow your business, try a tiered approach to lead generation.

Start with cheaper, less clear leads and work your way up to more expensive, clearer leads as your business grows.

Barry shares his success story:

"I built my business on this strategy. Instead of paying $4,200 for a lead that's ready to buy now (on a $10,000 commission), I'd pay $15 for a lead that's still figuring out what they want."

This approach means you need to teach consumers.

  • Guide them through buying a home.

  • Hold seminars for first-time homebuyers.

  • Offer buyer consultations.

  • Explain agency agreements clearly.

Yes, it takes time and effort.

But by teaching people, you're not just getting leads - you're building lasting relationships with clients.

Open Houses: Free Lead Generation at Its Best

Open houses are still a great way to get leads.

And the best part? They're basically free!

Barry says:

"Open houses are a big win for us. You can sit there, talk to people about the home, and make a good plan to keep those visitors searching for other homes on your website."

Open houses take a lot of time.

And you'll need to work hard to get and nurture those leads.

But think about it - you're talking to potential clients who've already shown interest in a specific property and price range.

That's half the work done already!

Just be realistic.

Many people at open houses might already have a realtor, or they might just be looking casually.

You'll need a good plan and follow-ups to overcome these challenges.

Sphere of Influence Marketing: It's All About Relationships

Don't forget about sphere of influence marketing.

This includes client events, contacting past clients, and getting involved in your community.

It might mean more face-to-face meetings and event planning, but the results can be great.

Barry adds:

"You could host client events, set up booths at bridal shows, reach out to past clients - all that stuff. Each approach has its good and bad points."

Client events, like community gatherings or dinner parties, let you connect with potential clients personally.

You can show your expertise and commitment to the community.

And don't forget to contact past clients - a personal thank-you note or holiday card can help keep relationships strong and encourage referrals.

The Future of Lead Generation: Embracing Tech

The real estate industry keeps changing, and so should your lead generation strategies.

In the coming years, artificial intelligence (AI) and machine learning will play a bigger role in finding and nurturing leads.

Predictive analytics, powered by AI, can help you find potential clients based on their online behavior, social media activity, and personal info.

By looking at lots of data, these tools can tell you who's most likely to want a new home.

This helps you focus on the most promising leads.

And don't forget about chatbots and virtual assistants.

They're getting smarter every day, letting you give quick, personal responses to questions and guide potential clients through the first steps of buying a home.

As these technologies get better, they'll likely become a crucial part of successful lead generation strategies.

Rolling with the Punches

Realtors spend different amounts on lead generation.

It all depends on their preferred strategies and how clear they want their potential clients to be.

  • Some methods, like buying high-clarity leads, might cost a lot.

  • Others, like open houses and sphere of influence marketing, can cost less but take more of your time.

At the end of the day, as Barry says, "You've got to do what's right for you."

Look at your strengths, resources, and business goals to find the best lead generation approach for you.

Stay informed about industry trends, use new technologies, and keep improving your strategies.

That's how you'll successfully handle the changing world of lead generation and grow your business in the years to come.

 

  • By now you know how good leads are essential for your success in real estate.

    As a realtor, you need to choose your methods carefully to attract potential clients.

    Let's do some more exploration on the financial aspects of lead generation and share some helpful tips to improve your efforts.

    Understanding Lead Acquisition Costs

    For the sake of having a ballpark figure, realtors spend between $0 and $250 each month on lead generation.

    However, as noted earlier, these numbers can change a lot depending on:

    1. Your local market

    2. What you want to achieve in your business

    3. How you prefer to work

    Here are some examples to think about:

    • Luxury real estate agents often spend more on marketing to attract wealthy clients.

    • New agents might need to invest heavily to make themselves known and build a client list.

    • Experienced agents with many referrals can often spend less on finding new leads.

    Calculating Your Return on Investment (ROI)

    Let's look at how much you might get back from different lead generation methods:

    • Buying qualified leads online might cost you $20 per lead, but more of these leads might become clients.

    • Traditional marketing like print ads or mail might cost less per lead but may not turn into as many clients.

    Time Management in Client Acquisition

    Remember to think about how much time each method takes:

    • Going to networking events or hosting open houses can take up your whole day. But you might make strong connections with potential clients.

    • Social media marketing or creating content takes regular effort. It can help you build a strong online presence and attract leads over time.

    Finding the Right Lead Sources for You

    What works well in one area might not work in another. Keep these ideas in mind:

    • In small communities, getting involved in local events can be great for finding leads.

    • For high-end properties, ads in fancy magazines or partnering with luxury brands might work better than general online ads.

    Tips to Boost Your Lead Generation

    Want to improve your lead generation? Try these strategies:

    1. Make it personal: Create marketing messages for specific groups of people. This will make people more interested and get you better leads.

    2. Work together: Team up with businesses like home stagers or mortgage brokers. You'll meet more people and share referrals.

    Pros and Cons of Different Lead Generation Methods

    Every approach has good and bad points. Let's look at some options:

    • Referral programs can be great, but you need to spend time building relationships with clients.

    • Content marketing can make you look like an expert and attract leads naturally. But it might take longer to see results compared to paid ads.

    Important Numbers to Watch

    To see how well your lead generation is working, keep track of these numbers:

    1. Engagement Rate: How much do people interact with your social media posts or emails? This shows if your content is interesting to them.

    2. Lead Quality: Keep track of details like budget and timeline. This will help you follow up with the right leads and turn more into clients.

    Detailed Look at Lead Generation Costs

    Let's examine the costs of different lead generation methods more closely:

    • Networking events might have extra costs like fees, travel, or promotional materials.

    • Content marketing costs can be very different depending on whether you do it yourself or hire someone.

    More Things to Consider

    Here are a few more points to think about:

    • Google Ads can be great for targeting specific keywords and locations. But you need to keep adjusting them to get good results.

    • Direct mail can help you stand out in a digital world. But fewer people might respond compared to other methods.

  • BARRY:

    "So there's Google ads, Facebook ads, order leads, open houses, and sphere.

    And with sphere, there could be subcategories there.

    There could be, you know, client events.

    There could be booths at, you know, Brial shows.

    There could be past client outreach, all that, all that stuff, you know, and all of them have benefits.

    All of them have drawbacks, right?

    So probably the cheapest would be client events, but it also is the most demanding with regards to face-to-face interactions, planning events, dinners, things like that.

    So none of them are necessarily bad.

    What I would really challenge everybody to do is to ask themselves a question is what's right for you, right?

    Obviously a lead, buying leads online is a fantastic way to scale your business because you're literally paying money to talk to people that are interested in the service you provide.

    And then how much you pay per lead depends on how much clarity you want the consumer to have, right?

    So there's some services that they wait to send you the lead until the lead says, I want to buy in the next 30 days.

    And then the service sends you the lead and they want a 42% referral fee, right?

    Now you might say, well, I don't really care because I got somebody that's ready to go look at houses this weekend.

    OK, that's a personal decision.

    That's totally fine with you, right?

    Or there's the opposite end of the extreme.

    There's somebody that saw a pretty house on Facebook, clicked it and said, I'm going to put my information because I want to look at more of the photos, right?

    And then you call them and they're like, I don't really know what I want, right?

    Well, I built my business off of that scenario of essentially buying leads much cheaper instead of paying, you know, if it's a $10,000 commission, instead of paying $4,200 for the lead that's ready now, I'm paying $15 for the lead that doesn't know what they want yet.

    And that was right for my organization, because my organization is really big on teaching the consumer, bringing them in, having, you know, first time homebuyer seminars, homebuying seminars, the buyer consult, go over agency agreements.

    So for us, that's kind of where we landed.

    Ultimately, you've got to do what's right for you.

    I would just say that if you do buy a service that is costly, like a 42% referral fee, I would tell you that it's kind of like something you do for a little while.

    And then you've got a master climbing up the funnel to make more money.

    Probably under that, you know, another one we do really big is just open houses, you know, to be able to sit there, have people come to the house and talk to you about the home and have a really great strategy to keep those people that walked in the home on your website searching at other homes is also a really great strategy.

    I mean, the pros are it's free.

    The con is it's a lot of work.

    It's a lot of work to generate the leads.

    It's a lot of work to cultivate them because we call them leads.

    But, you know, if you set up a table, first of all, it's not free.

    You're going to have to pay for the table, but it's not a lot.

    Let's say it's $500 and you have a raffle, right?

    And let's say you get 100 people and you had a Yeti cooler.

    I don't know what they cost. Let's say that's 500.

    So now you spent a thousand dollars and you had 100 people submit their information to to get that Yeti cooler.

    And maybe you had a box you thought ahead and you're like, are you interested in buying and selling? And out of the 100, maybe five said, yeah, I'm interested in buying or selling one day. Well, now you've got 100 people.

    That's $10 per person.

    Right. And now you got to send information to all 100.

    You got to try to see if you can strike up a conversation.

    The five that said they're interested in buying or selling one day.

    Now you got to figure out, like, can I talk to them about that?

    You call them. It was great meeting you.

    Sorry, you didn't win the Yeti cooler.

    But I am hoping that I can talk to you about real estate one day.

    And they're like, oh, my friend's an agent.

    You know, so you have you're basically collecting a lot of people's information, but you're really struggling to actually sell houses because people don't wake up and suddenly say, I think I'm going to buy a house tomorrow.

    You know, it's something that takes a long time.

    So that's why focusing on the house and having people come to the house, you know, at least that there's interest in that type of property and that price range.

    You're farther along in your journey, but it's still really hard because if you've held an open house, you know, most people are just like, oh, I'm not interested.

    I have an agent.

    My cousin's an agent, something.

    And so you have a lot of hurdles that you have to overcome.

    So definitely pros.

    Like, it's great if you want to do free lead, Jen, but the cons for me, it just made it to where it wasn't worth it for me.

    I really enjoyed talking to people that were interested in the service that I provide.

    And then I can I can sell myself.

    I can teach them, which is a passion of mine and empower them.

    But I would say high level.

    Those are probably the pros and cons that come to mind for me."

 

Barry Jenkins

Realtor, Speaker, Coach, Trainer, Author, and Head Realtor in Residence at Ylopo