Real Estate Lead Generation & Conversion

Posts Tagged ‘qualifying real estate leads’

Making Internet real estate leads profitable requires implementing a triage approach based upon lead quality. Your goal is to convert the highest possible number of leads into sales with the least possible investment in sales resources. A lead qualifying system should  segment prospects based upon likelihood of conversion. The best qualified prospects should receive lots of hand holding and trust building communications. The least qualified prospects should typically be placed into a drip e-mail campaign in order to ensure that they do not eat up too much of your time without producing meaningful sales activity. 

Internet real estate leads typically convert at a rate below 4%. Thus, if you are acquiring leads that convert at a 3% rate, it requires working 33 leads to generate a sale. If your goal is to generate one transaction a month from Internet real estate leads, then it requires the acquisition ~33 leads per month. If the average time from lead acquisition to closing is four months, that means that the pool of leads you would be working with will grow by roughly a multiple of 4. Attempting to have regular personalized contact with 132 prospects gathered over a four month period would almost certainly lead to burn out in short order (assuming weekly communication and a six day work week, this would required 22 prospect contacts per day).

The best way to qualify a lead is via telephone. Once you get a prospect  on the phone (and it is recommended that you make five or six attempts and leave two voice mails before relegating a prospect to drip e-mail. A previous article addressed the importance of quickly contacting leads and making multiple attempts to contact them), a series of scripted questions should be asked. As you are asking these scripted questions, do so in a friendly conversational manner that creates goodwill between you and the potential client. Do not be a slave to the script if the conversation veers off course, but ultimately get back to it. Here are some examples of qualifying questions for buy side prospects: 

Lead Qualifying Questions

1. Are you working with another Realtor? Avoid violating the Realtor code of ethics prohibiting poaching another agent’s client.

 2. How long have you been looking? If the lead has been looking for a long time, they may not be very committed to conducting a transaction, and not deserving of too big an investment of your time.

3. Is there an upcoming event that  is motivating you to consider buying a new home? Relocation, marriage, divorce, child entering school, etc. can be motivating events and suggest a high conversion likelihood.

4. What geographic areas are you interested in searching? Are they interested in communities where your market knowledge will enable you to provide particularly useful guidance. 

5. How soon would you like to be in your new home? The response to this question may be of less value than might be anticipated, but if  the buyer indicates over a year, relegate them into a drip e-mail campaign with just enough ongoing personal contacts to keep your name top of mind if they do become serious about buying a home.

6. Are you a first time home buyer? First time home buyers may require more hand holding. They may also be much more excited about taking your phone calls. (author’s side note – the fact that my first home closing took up most of an afternoon seemed fine to me, it seemed to give the process an appropriate gravitas – first time home buyer obviously have very different attitudes than veteran home buyers).  

7. Do you have a home to sell before you can buy? Just a few years ago, a “yes” to this question would be welcome as it would indicate an opportunity for two transactions. In today’s more challenging market, it may indicate that that it could be months before the prospect is able to buy a new home. 

 8. Have you pre qualified for a loan or have you  met with a lender? Understanding whether the lead has pre qualified for a loan will help you determining how far down the path they are and their level of engagement. Also, a prospect that is pre qualified for a loan is more likely to be realistic on price and their capacity to obtain financing.

9.  How Large a Downpayment Are You Planning Upon?  Determining if the prospect has a realistic view of their likelihood of obtaining financing is an important qualifying factor.

10. Do you and your partner typically visit properties together. This is a round about way to get at the question of the level of engagement of both partners when working with a couple. The person you are in contact with may not have sole decision making authority. Although it seems stereotypical, a female partner/wife is often the house shopper, but will share the decision making process with her partner. Do not rely exclusively on building a relationship with just one half of a couple.

 Optional

If you use a Buyer Agreement, it may be appropriate to ask probing question about their willingness to sign one. However, just probe. Do not push for a buyers agreement too early in the process.

Lead Quality Changes Over Time

Keep in mind that lead quality is dynamic. Hot leads go cold, and cool leads get hot. A drip e-mail campaign is a good method of incubating leads that do not exhibit any sense of urgency, but be on the look out for leads that are warming up. An obvious tip-off that a lead may be warming up is receiving an incoming phone call or e-mail from them.

Ask For An Appointment

According to Dick Zeller of Real Estate Champions, “The best way to qualify people is to ask for an appointment. In one question you can separate the motivated ones from the unmotivated. The people who are unmotivated will fight not to meet with you. This appointment should be at your office. Do not set the appointment to look at a property. Set the appointment for your office where you have control. The prospect knows that you are serious about creating a relationship and helping him. If he doesn’t want to or is not ready he will avoid the appointment. ”

Form Based Leads

The information obtained from Internet forms often provides valuable information as a first step in the lead qualification process. In particular, information about time frame, and mortgage qualification status can be particularly useful in prliminary lead qualification. However, be somewhat skeptical about the information inputted. Much of it is incorrect. The question “how did you learn about real estate broker XYZ” is answered incorrectly as often as half the time (if “via radio” is inserted as a choice on the form, even if you have never run radio advertising, it will still be selected by 3-4% of respondents).   Also, do not discount the leads that indicate their timeframe is “6 months to a year”.  Although they may require a greater time investment prior to transaction, they are only about 20% less likely to convert than prospects that indicate that their timeframe is “immediately”. On the other hand, beware of wasting time on leads that indicate that their time-frame is “over a year” or “just browsing”. Their conversion to sale rate will be very low. Also, price ranges inputted into forms are often incorrect. Call the lead to ascertain if the price range and other information inputted via forms is correct.

Conclusion

All leads are not created equal. Doing an effective job of qualifying leads and determining how much time should be invested in personal communication with each prospect is a critical aspect of converting Internet real estate leads into sales. Be conservative about discounting the value of a lead until you have spoken with them and verified the information they have submitted. Internet leads may have a low rate of conversion to sale, but effective qualification 0f the leads can be a path to great success.