Agents Only Get 12 Leads a Year

by Victor Lund on January 21, 2014

DataReturning from the Real Estate Connect Conference (aka Inman NYC), you would think that any agent or broker who is not 100% dedicated to cultivating the online customer is doomed. Yet surprisingly, nothing could be farther from the truth. In fact, if you read between the lines of a recent press release from Realogy, the global leader in size for a real estate group, your take away might be that online marketing and lead generation is a complete distraction and waste of time and money.

Headline: Realogy’s LeadRouter System Delivers Record 3 Million Online Leads to Its Affiliates in 2013, an Increase of 13% from Prior Year

About Realogy Holdings Corp.: 244,000 independent sales associates

Do some quick math and you will see that each sales associate gets about one lead per month.

This is in no way a critique of REALOGY. Their LeadRouter system works just fine, and it manages leads from 20,000 offline and online sources. That is quite a wide swath of marketing. Simply stated, lead capture and lead routing volume is not enough to build a business on. It’s not even close.

At Inman, I stood next to Ben Kinney. His “team” sells about 500 homes per year at a production volume of $100 million in a very competitive market. His secret – 50 calls and 50 emails a day. His goal for lead conversion is to close two transactions out of every 100 leads. Most agents are lucky to do one closing from every 100 leads.

Some really smart people have figured out that there is no ROI on chasing online leads, but they do it anyway because you cannot have a rational conversation with an agent or a seller about it. So many people live in a fog that makes them believe that the Internet sells homes. Nothing could be further from the truth.

Century 21 put out a press release about their website being the number one brand website for real estate traffic. Clearly they get their share of leads that sells some homes. But what it really sells is franchises, helps franchisees recruit and retain agents, and sounds spectacular in a listing presentation.

The moral to this story is that nobody should build a business plan around building a successful real estate business based on online leads and lead conversion. Companies should be built around CRM solutions that keep real estate agents focused on customer list building, customer relationship building, and direct marketing. If a lead comes in and becomes a sale – think of it as a gift, not a result.

{ 4 comments… read them below or add one }

Judy Moses January 22, 2014 at 5:52 pm

Great points here. Thanks for the courage to peek behind the curtain and tell it like it is!
To me, online is like a resume – I know folks will look there, but mostly after someone has personally recommended me.

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Richard Hinds January 23, 2014 at 4:26 am

“‘Belief is stronger than proof” (the title of a recent Seth Godin blog). This is a prime example.

It is ironic you use the phrase “you cannot have a rational conversation with an agent” about this issue (i.e., trying to show them irrefutable facts that directly contradict their beliefs about this issue). A large segment of society become irrationally defensive when their long held, yet erroneous beliefs, are in any way challenged or refuted with hard facts.

Just ask any obesity expert who tries to explain (and prove with hundreds of medical studies published in major medical journals) that obesity is simply caused by individuals eating too many calories and that overweight people in fact burn more calories and not less than their normal weight and/or thin counterparts (i.e., they don’t have a metabolism problem they have a calorie consumption problem). And that all calories are the same, its is simply that fact they eat too many of them.

You see what is happening to the obesity pandemic. The same thing will happen to the “internet sells homes so I got to buy every new gimmick that comes down the pike epidemic.” The same psychological quirk is why there are over 100,000 diet books on Amazon.com alone an all of them prey on the overweight persons ignorance and refusal to face and accept the cold hard facts … there are only four sources of calories and they are simply consuming too many. You want to see irrational? Try to convince these same people, the ones who are overweight, about the facts of obesity, its causes, and its only cure.

I suggest you wear a bullet-proof vest.

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Jose Perez January 30, 2014 at 10:27 am

I completely agree that agent touch, CRMs, direct marketing, and everything else you mention is critical. That said, today’s consumer expects an immediate response every time they request anything online.

Why should it be any different when they request information from a real estate company?

The problem is most companies do not have any sort of rapid and consistent way to respond to that consumer. Those that do have a much better chance of engaging the consumer than those that don’t.

If that is one more way for a broker and/or agent to differentiate themselves and show they “get it” then it is certainly something that needs to be pursued and something that can potentially generate additional revenue both directly through closed business and indirectly through brand protection.

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scott dixon February 17, 2014 at 11:47 am

Great observations, Victor. I sometimes wonder whether real estate professionals are in the helping someone find or sell a home business, or the technology business. Every business in America has been impacted, in mostly good ways, but not always, by technology. The key is to have technology serve the business and not the other way around.

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