No, your office shouldn’t send you leads.
You may have been contacted in the past by a brokerage who promised to feed you internet leads. If considering this as an option, do yourself a favor & have a read prior to making the switch.
Being the CEO of an online lead generation company, I want to be the first to tell you, “Internet leads are mostly garbage”. OK, now that I’ve gotten that off my chest, let’s talk about what you can expect from online leads & these lead providing brokerages.
You have a 90% chance of being taken off leads within the first 4 months
Most agents who try their hand at online leads fail within the very first 4 months. This isn’t because you aren’t good at what you do; it’s because you don’t know how to work Internet leads. If you did, you most certainly wouldn’t be joining a brokerage that feeds you leads; you would source your own.
Be prepared to pay up to a 60% commission split
You have to understand that funding a lead generation campaign is expensive for an office. First, they have to deal with a high turnover (90% of agents are fired in the first 4 months). Second, they have to work with very low conversion rates; most agents who try to work online leads convert only 1.5% of all the leads they receive. Don’t get me wrong, I’m not here to justify their split, I’m just saying that if you want internet leads don’t expect to get them for free. The big take home here is this: if you generate your own online leads, your cost per deal closing as an average agent will be much less than paying up to 60% of your commission to the brokerage. So the leads given to you from a brokerage may not come at an upfront cost, but by the time the deal is done, you’ve paid thousands of dollars more to close that deal vs simply sourcing the lead yourself.
Unless you maintain the expected conversion level, you’ll be fired
Even if you are among the 10% who end up keeping their position in the lead distribution program, you’ll be fired if you can’t keep up with the closing percentage that they expect moving forward.
Let’s take a closer look at the numbers
Now, let’s say you aren’t fired. Great! This means you’re closing business regularly. But what you’re really doing is making your office money, and taking a major hit on your own income. Tying into my point about paying a commission split: Just imagine how much money you would have made had you sourced the leads yourself? Sourcing your own leads and closing as an average agent will have a cost per deal under $1000, whereas working off a commission split can easily bring your cost per deal to $5000 – $10 000 i.e. if you work off a 50/50 commission split and close a deal that sources $20 000 commission, you’ve just paid your brokerage $10 000 for that deal.
The bottom line is your office shouldn’t be involved with your marketing or lead sourcing. If they are, you should be paying for that marketing; it should never come out of your commission.
I think offices need do a better job in vetting the companies that they choose to work with. Too many companies tend to take advantage of the agents who don’t understand how online lead gen works. It can be difficult for an office to understand how a company works without actually trying the company out themselves. With that said, I think that a company who has been around for long enough tends to stand out. Agents start to talk about how they were treated, and this word of mouth can speak volumes with regards to a company’s worth.
Before you get into online leads here is what you need to know:
- Your cost per lead is dependent on the city you are targeting. The average cost per lead across all Canadian & US cities is $12/lead. Here is a fairly accurate chart of costs per lead in Canada http://alleads.wehelp.ca
- You need to call the lead as soon as you get it. Preferably within 5 minutes of the lead coming in.
- You need to keep calling the lead until you get a hold of them. Some agents keep calling at different times in the day for up to 2 weeks. I’ve also heard the expression “I keep calling until they buy or die.”
- Once you get a hold of them figure out what stage of the buying process they are in and what their motivation is. Once you have that you can set a proper follow-up. We will either keep on them to meet or set a long-term follow up.
- Anywhere from 20% to 40% of all the leads you get will be completely fake.
- Leads that you are calling don’t know that you will be calling them, we have a good idea that they are looking to buy/sell but they don’t expect a call from you.
- Most agents convert at 1.5%. There are agents that convert at much higher percentages, but you shouldn’t expect that to be the case on your first attempt. Learn the processes and projections, and trust in the numbers using the 1.5% closing percentage as your base.
There are plenty of companies that offer online lead generation. As I mentioned, I am the CEO of one of them, but you need to do your research. Explore what’s out there. Here is an up to date list with a few of the top lead gen companies:
http://www.AgentLocator.ca – My company, we’re based out of Mississauga Canada & bill in Canadian dollars.
http://www.RealEstateWebmasters.com – A company out of Nanaimo Canada, bill in US dollars.
https://www.commissionsinc.com/ – A company based out of Atlanta USA, bill in US dollars.
http://boomtownroi.com/ – A company based out of Charleston USA, bill in US dollars.
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