• Tom Grisak

Don't Buy Leads


This is the first of my "Don't Do list" for a good reason. It's a trap many new agents fall into early in their career. I did it myself not knowing any better and I'll be most veteran agents will tell you they've done the same.


We all start out a little panicked because we don't have an established pipeline of leads. We don't really know how to get on leads. The age old advice from your broker or team leader is just "pick up the phone and start calling people". We all know how painful that is but one day you receive an email or see a company that sells leads at a Realtor convention.


Their representative will make it sound so logical. Why spend your time trying to dig up your own leads when we can send you ours?


Besides, if you make just one deal, that will more than cover your costs of buying leads


You'll hear that phrase a lot in this profession. You can go broke signing up for all those programs that will pay for themselves with one deal.


Sure, you'll get names but they're almost all poor quality leads. If they're buyer leads, you'll run the tires off your car wasting time with people who either ...

  • aren't really ready to buy,

  • don't know where they want to live,

  • or the commission paid on the home they'll eventually want to buy won't come close to recovering the time and effort you put into finding it

Every hour you spend driving your client around in areas you'll probably never work again, you've lost an hour trying to build a relationship with someone within your area of expertise. You'll never get those lost hours back either.


You have to work smart to survive in this business and buying leads is a losing proposition and I'll give you a true example why. If this doesn't convince you, nothing will.


A broker in the Dallas area with her own team had a reputation for spending huge amounts of money on Zillow leads. Several sources told me the costs came to about $500K per year. The broker had a fairly large team of agents they were funneling these leads to.


Over time, the number of agents kept declining within the brokerage until it pretty much dissolved. I asked one of the agents why they left and she said "they were expected to chase down leads passed on to them all over the city. She made some deals but said it just wasn't worth it".


As more agents left, more leads should have been going to the agents who stayed, yet they left too. That tells you a little about the quality of leads they were getting.


Predictive Analysis Leads


You'll also start hearing about companies that sell you "predictive analysis leads". They'll tell you their algorithms can predict who will be selling based on their age, balance on their home mortgage, age of their kids, etc. The sounds great too and many years ago I tried one. I never made a single sale.


Of course, when you contact the companies that sell you the leads and ask them what's going on, they'll tell you it's your fault in the way you're working them or it took too long for you to respond. It's never the quality of the leads. I finally gave up buying leads, wrote it off to a good lesson, and never bought another.


Look at it this way, if lead buying is so great, why hasn't every veteran agent out there built their company around them? I don't know a single experienced agent who uses them. Furthermore, how would the agent even know whether the same lead they've been sold is going out to four or five other people?


Go to any real estate blog site and look for a thread where a new agent asks the group what their opinion is on buying leads. You'll hear all the veteran agents say the same thing "don't do it, you're throwing your money away".