Should You Buy Real Estate Leads?
Agents new to the business and/or struggling often resort to buying real estate leads out of desperation. Zillow, Realtor.com, BoldLeads, and now Zurple are just four of the many companies that sell leads. Is it a good idea? Do they work?
I tried buying leads myself a couple of times early in my career. I asked one of the companies where they got the leads and was told they use predictive analysis. They might search the tax rolls for people who have owned their homes for quite awhile and should have equity. Or elderly people who might be considering downsizing. It might be homeowner with kids graduating from high school. They might be thinking about downsizing after the kids are gone. There's so much data out there, with a little research you can easily find all of those things.
How Hard Is It To Convert These Leads?
I'll share my experiences first, then give you a couple of things to think about. If I remember correctly, I was paying Zillow around $1,000 per month back then. Costs varied depending on where the leads were coming from. Leads in areas with lower priced homes cost less than leads in the more expensive areas.
Although I was getting leads, they weren't quality leads. As far as I know, no-one from Zillow ever actually talked to and qualified the leads they passed on. The great majority of leads I talked to had no intentions of buying or selling. Often they weren't even in the area I was interested in. Some were irritated they were called and asked where I had gotten their name and number.
Zillow will probably ask you to sign at least a 6 month agreement. At $1,000 per month, that's $6,000. If you want to get out of the contract, you'll probably get charged two month's fees.
Keep in mind, when you buy a zip code, you don't "own it" either. Zillow usually farms leads out to four agents in a zip code, or even more for all I know. If you want more leads, you pay more money.
You might expect to see a 2-3% conversion rate if you work every lead that comes your way. I came to the realization I could do much better and use that money for my own marketing.
The Broker Who Went Broke Buying Zillow Leads
Years ago, there was a broker with a large team in the Dallas area who built her entire business around Zillow. Word has it she was spending $500K per year buying Zillow leads and needed agents to work those leads. Then her team basically folded.
I talked to a couple of agents who left her team and asked what happened. I was told they were expected to follow-up with all the Zillow leads that came their way and most resulted in nothing. Those that did were scattered all over Dallas so they were running the tires off their cars
All of the agents eventually left for greener pastures so what's that tell you?
Why Are Zillow Zip Code Opportunities Always Opening Up?
To this day, I still receive calls from Zillow when a great zip code opens up. That begs the question, if the leads are so good, why in the world would any agent ever give up a good zip code?