Real Estate Lead Generation & Conversion

A single property website focuses on showcasing a single property or a single listing. There is some debate over whether single property websites are an effective marketing tactic or just a gimmick to impress current and prospective clients. A single property website certainly offers vanity appeal to a home seller that has a website dedicated exclusively to their property. However, beyond just being a vanity offering that impresses clients, there are marketing benefits to creating single property websites. Having a short URL, such as www.propertyaddress.com, is very straight forward and memorable when used in marketing marterials and e-mails. Due to the limited number of characters, a single property domain does not use up much space and avoids having annoying line breaks that occur with long URLs.  Single property website domain names are particularly effective when utilized on yard signs. They fit on the signs and are memorable even to prospects quickly passing by in their cars.

Another benefit of a single property website to a home seller is that a prospective buyer directed to a website focused on their property is not going to be distracted by opportunities to browse other homes. There is no “shiny object”  search box on the site pulling the prospect’s attention away from the seller’s property. This applies in particular when a prospect enters the address of the home directly into a search engine. It is much better for the home seller to deliver the prospect directly to information about the seller’s property rather than to a webpage where the viewer may have to scroll through lots of properties before they find the right one, with lots of opportunities to become distracted by competing homes.

Although the following are single property subdomain websites, they serve as good examples of what a single property website looks like.  

22429 Brookside Court, Lake Barrington IL 60010

http://22429brooksideway.agents123.com

3550N Pine Grove Avenue, Chicago IL 60657

http://3550northpinegroveavenue.agents123.com

For reference, the above are subdomains because they are webpages on the agents123.com website. A full fledged single property website would only have “www.propertyaddress.com” in the URL without adding any other domain name inbetween the property address and dotcom (agents123.com in the above example), but the above  offer good examples of  the content of a single property website.

If you are interested in more information about single property websites, or would like to discuss having us create single property websites for your clients, contact us at sales@brokerdynamix.com or call  (847) 680-8811.

There has been some buzz lately suggesting that online real estate leads must be responded to within 5 minutes. However, research that I conducted on thousands of online real estate leads suggested that the time frame is a bit longer than just 5 minutes, if not all that much longer. While it certainly is not a bad thing to respond to an online lead within five minutes, the results that I reviewed indicated that the value of the lead did not begin to significantly degrade until after about the 15 minute mark. So while a quick response is required to maximize the conversion rate on online real estate leads, you don’t need to panic if you are on the phone and can’t get to them within 5 minutes. Further, the review of conversion rates of online leads indicated that as long as a connection with the lead was made during the same day that the lead was submitted, then the conversion rate remained fairly high. The huge drop off occurred if the lead was not connected with on the day they submitted their contact information. Conversion rate from lead to sale dropped off by 40-50 percent if not contacted on the same day.

A surprising result of the study was that the conversion rate of leads contacted more than 15 minutes but within an hour after submission, was only about five percent below the rate on leads contacted within one to four hours. Thus, the one hour mark was not very meaningful in terms of contacting leads. The two key deadlines seemed to be 15 minutes and same day.

As a caveat, the above referenced study was conducted based upon reviewing real estate leads that were exclusive to a single real estate broker. It may not be the least bit applicable to leads that are sold to multiple sources. 

It seems likely that the idea that online real estate leads must be responded to within five minutes is based upon research by Dr. James Oldroyd of MIT on lead response management. However this study is focused upon leads in general and is skewed based on lead generation companies that sell their leads simultaneously to multiple sources.

Regardless of whether the deadline for responding to online real estate leads is 5 minutes or 15 minutes, a key factor in producing a good lead to sale conversion rates is to respond quickly.

Internet leads are different. They tend to be self directed, better informed, and don’t need to be chauffeured to as many viewings. On the other hand, they can be challenging to close because often they are simply in the information gathering process and months away from conducting a transaction. Also, despite the fact that they will take longer to close, they demand greater responsiveness. Failure to respond to a fresh Internet lead within 15 minutes diminishes the likelihood of closing the lead. Further, you are typically likely to have much more perceived credibility with a traditional lead. With an Internet lead, you are usually starting from scratch in terms of gaining their trust and even getting them to take your phone calls.

An informative article on courting Internet leads, “Meeting Consumers Earlier in the Process Means You Need to Adjust Your Approach” by Jim Zirbes was recently published by Arizona Realtor Magazine. The article includes a sample phone conversation script using a traditional lead approach and an Internet lead appropriate approach.

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.

Providing a “reason to believe” is a basic component of the positioning statement of most major advertisers. The “reason to believe” can include:

• Technical reasons or superiority claims (e.g. faster, or better value)
• Functional benefits that help prove the benefit promised (e.g. provides superior mobile phone coverage)

A classic example of an advertiser that effectively utilized a “reason to believe” is Crest Toothpaste. After winning approval to display the American Dental Association (ADA) Seal of Acceptance in their advertising and on toothpaste tubes, sales and market share rocketed. The endorsement from the ADA served as a very credible reason to believe the Crest claim that using the brand “prevents cavities”.

Just as providing a “reason to believe” is an effective tactic  for major advertisers, real estate professionals can increase lead conversion rates by providing prospects  with a “reason to believe” supporting benefit claims. The key to effective use of this tactic is to: 1) offer a benefit message that is meaningful to your prospects; and 2) provide a credible “reason to believe” in your benefit message/claim. If your benefit message is that you will provide “fast, accurate, and valuable guidance”, then you should provide a “reason to believe” to support this claim.

One of the best sources of “reasons to believe” are testimonials from clients. A good testimonial will both enhance your credibility and provide a specific example of how you assisted a client. The alphabet soup of credentials and designations (ABR, ACRE, CRB, CRB, GRE, GREEN, SRES, AHWD, e-Pro, SFR, QSC, etc.) are also useful in supporting your benefit claims. Awards and honors, such as Million Dollar Club or President’s Club also are impactful. Additional “reasons to believe” can include your transaction history, experience, and local connections.

However, simply providing a list of credentials or awards is not nearly as effective as utilizing them as “reasons to believe”  supporting a benefit message that prospects can identify with. As an example, if you have earned ePro Certification, it is important that it translates into a meaningful benefit to your prospects.  Provide anecdotes on how your Internet savvy has led to successful outcomes for your clients. Your prospects need to be able to translate how your benefit message applies to their situation.

Conclusion

Providing a credible “reason to believe” supporting your benefit claims can increase lead to sale conversion rates. Your “reason to believe” provides support that your service will deliver the benefit that you claim to offer. The most effective reasons to believe are the ones that are particularly credible.  Displaying credentials, designations, and awards is a good tactic for supporting benefit claims, but simply listing them without utilizing them to support a benefit claim fails to take full advantage of the effort expended to obtain the credentials.

The results of a survey published in the April 2010 issue of “Texas Realtor” seems to indicate that once home sellers have decided to pull the trigger on selling, they often select the first agent they contact:

• 62% of home sellers only interviewed one agent before listing their home.
• 19% of home sellers talked to three agents before they selected one
• 3% found picked their agent by walking in or calling a real estate office and speaking to the agent who had floor duty at the time they called.

Internet leads offer real estate brokers and agents their best opportunity with some prospects that conduct research online to: 1) establish contact when the prospects are ready to pull the trigger on a home sale or purchase; and 2) establish communication with prospects that can be nurtured so that once they are ready to transact, you end up being the one agent they interview. Web browsers that are searching Internet real estate sites and call the phone number listed on a Web site are particularly good prospects, which is supported by the above referenced survey.

The seemingly impulsive nature of the respondents to this home sellers survey reinforces the opportunity to generate transactions based on being the first agent contacted. While there are many methods successful real estate brokers and agents utilize to establish these contacts, do not overlook the potential for generating prospect contacts and sales from Internet lead generation vendors. (Full disclosure – the author of this post is the Director of Broker Dynamix, a leading provider of quality Internet real estate leads)

Norm Werner is a Realtor in Milford, MI. He is also the editor and chief contributor to The Milford Real Estate Scene blog.

I read and post to lots of real estate oriented blogs. The topic of buying leads often pops up in those forums. It’s interesting how few agents actually post to these discussions that they buy leads, probably because the “Oh, no, don’t buy leads” voices are so strong and loud. It’s as if they wanted to burn a big scarlet “L” in your forehead if you admit to buying leads. Well, I buy leads and have for years. Like anything else it’s a numbers game. You chase 10-20-30 bad leads for every one that pays off; however, I’ve never had a year yet when I couldn’t look back and see the business that I got from the leads and determine that the sales that I made not only paid for the leads, but also ended in a profit for me.

I suppose that there is a number of bogus or shady lead selling companies out there. I’ve certainly been approached by many and turned them all down, too. I don’t pay any commission or per deal charge, just a monthly fee for X-number of leads. I’ve switched back and forth as the market changed between buying listing leads or buyer leads – right now I’m on the buyer side.

I also get leads from my company – relos and leads off it’s Internet presence – but those come at a price too – a split on the resulting business, so they’re not free either. Perhaps the lead-buying nay-sayers are old timers in the business who get much of their business from referrals by past customers. I too get some business that way; however, in the current market one needs multiple sources of potential business and buying leads is one possible source. The key, I think, is to find an honest company with a strong Web presence, since that’s where potential buyers and sellers are starting these days. I also have four real estate Web sites that I run, from which I get leads.

I’ve also posted on occasion about a secondary benefit of working these paid leads – the experience that results. When I was doing 2-3 CMA’s a week for seller paid leads, I got lots of market pricing experience in lots of local neighborhoods. Now, as I work with potential buyers, I’m showing houses in lots of different neighborhoods, too. All of that adds to my experience base.

So, before you let the nay-sayers scare you completely off buying leads, look around at a few of the companies out there that might be able to give you something to work on that could lead to business. Sure it costs money, but then sending out postcards or buying door hangers or any number of other prospecting methods also cost money and may have about the same ROI potential. Email me if you want to know which company I buy leads from and I’ll tell you.

A simplistic answer to the question of what percentage of Internet real estate leads result in sales is probably that the across the board rate for all Internet leads is about 2-3%. However, this statistic by itself is not terribly informative. The range in conversion rates from Internet real estate lead program to program varies tremendously.  

In a  similar vein, knowing that the average height of an NBA basketball player is 6’7” is not a particularly informative piece in regard to a particular player. The player could range in height from 5’8” to 7’4”. 

Among the key factors that will determine the closing rate for Internet leads are: 1) lead quality, 2) how quickly the lead is contacted and the contact method; 3) the quality, quantity, and frequency of the lead incubation follow-up contacts; 4) and how effective the team or agent managing the lead is at closing the sale.

Thus, an exclusive “schedule a showing” lead that is contacted within 15 minutes of their clicking on the submit button may convert at a 10% rate.  A “forced registration” lead that is sold to multiple real estate professionals and is not instantly forwarded to the lead purchasers’ for follow-up will probably close at a rate of under 1%. (For reference, Broker Dynamix has a client that indicates that over 5% of the leads we supply convert to closed transactions)

 The conversion rate issue becomes particularly tricky in regard to factors that trigger a trade-off between lead quality and number of leads. A lead capture form that requires phone numbers will generate fewer leads than one that only requires an e-mail address, but leads without a phone number are of lesser value. A forced registration Web site that requires registration in order to view information will generate more leads than a free IDX search Web site that captures leads through voluntary registration, but the lead quality will be lower from the forced registration website. Conversion rates can also be impacted by whether or not invalid leads are included in the calculation.

Thus, it becomes challenging to provide a definitive answer in regard to the question of what percentage of Internet real estate leads result in sales.  However, the more important question to ask it “what is the conversion rate from lead to sale for a particular program?”.

A key reason that Internet lead programs can be particularly desirable is that the return on investment (ROI) can be tracked. Unlike other forms of advertising where you don’t know which half of your spending is being wasted (with apologies to John Wanamaker for paraphrasing his famous quote), with Internet leads the ROI of 100% of the spending is theoretically measurable. 

The trackability of Internet lead programs allows you to quickly eliminate the ones that are wasteful, and to ramp up the efforts that are profitable. 

Measuring the ROI of Internet lead programs requires tracking the following:

• How many leads did you get?
• What are the attributes of the leads?
• How much did the leads cost?
• How many leads converted into sales?
• What was the all-in cost to generate a sale?
• What was your net commission per sale?

The size and complexity of your Internet lead program will determine your needs in regard to contact and customer relationship management (CRM) packages and Web analytics programs. While there are many excellent CRM packages designed specifically for the needs of real estate professionals, some agents find that off the shelf packages such as ACT or Salesforce are sufficient for their needs. And if you using your Website for lead generation and your vendor does not include a tracking program, the free analytics service from Google meets the needs of most brokers and agents. However, whatever system and programs you put in place for tracking leads, success will be far more likely if you can accurately track the six measures listed above.

How Many Leads Did You Get

A system for tracking “how many leads did you get” should allow for comparing leads on a period versus period basis, calculating trend lines to determine if lead flow is changing over time, and the capability to slice and dice the leads by specific time periods.  While sophisticated CRM packages are optimal for tracking leads, inputting result into a spreadsheet will suffice for many real estate professionals. 

What Are The Attributes of the Leads

The capability to segmenting leads based on attributes provided within the lead can make lead conversion phone calls and email much more productive. It also can provide clues as to the value of each lead. Examples of some of the potential attributes of Internet real estate leads include: 1) lead source and type; 2) full first and last name; 3) valid phone number; 4) valid e-mail address; 5) approved for mortgage status; 6) time frame to buy or sell; 7) price range of homes of interest for buy side leads; 8 ) specific home or neighborhood of interest, and 9) specific comments provided.

How Much Did That Lead Cost

Calculating the cost of leads is fairly straightforward if you are buying leads from a lead generation firm or if your primary source of leads is from a PPC program. A one dimensional  Internet marketing program can usually be accurately tracked if all lead submission “success” and “thank you for submitting your information” webpages are accurately tagged. Calculating lead cost can be fiendishly difficult if you have a multi-channel online and offline  marketing program. However, a reasonably accurate lead attribution model is critical to successful measuremnt of the cost per lead by source. In particular, the protocal for attribution of leads resulting from searches on your brand name can have a huge impact on the estimated cost per lead.  

How Many Leads Converted Into Sales

Tracking lead ROI requires that sales be attributed to the appropriate lead source. If you have a multi person team, this can be a more challenging task than might one might originally assume. Use of the whip may be required to capture this information. (Authors note – a lesson learned from personal experience)

The conversion rates of different types of leads and the competing vendors providing Internet leads can vary tremendously. Thus the answer to the question of how much is an Internet lead worth depends in large part on the quality of the lead and the lead to sale conversion rate.

In order to get faster measurement of lead program success it may be appropriate to track sales based on signed contracts and to: 1) utilize a “crater factor” (an adjustment that depends on the ratio of signed contracts that make it to the closing table – in some markets it may be appropriate to assign 80% of the value of a closed transaction to a sales contract ); or 2) adjust the results after the transaction is closed.

What Was The All-In Cost to Generate A Sale

In addition to the cost to acquire the lead, the other costs of generating the sale should be assigned to the lead. My suggestion would be to add in variable costs involved in managing all the leads from a lead program, including items such as mileage/transportation, mailing costs, copying, fees and/or wages directly associated with time and effort required to work the leads. However, it is probably not appropriate to assign overhead costs to Internet lead programs. Overhead costs that would remain unchanged if the Internet lead program is discontinued should probably not be assigned to the lead program.

What Was Your Net Commission Per Sale

Once you have determined the all-in costs of an Internet lead program, measuring the ROI is simply a matter of subtracting the cost from you net commission. Dividing your net profit from your investment/expenses will provide you with the ROI of Internet lead programs.

The Pay Off From Measuring The ROI of Your Internet Real Estate Leads

What do you want from Google?

In my last post I stated that when doing Internet marketing for real estate you don’t want to be found for a very popular search term.  I stand by that statement with two exceptions:  1) You might do this if you are building a brand, like you would at a very large brokerage firm, or 2) You might do this if you have a lot of under utilized resources on your payroll and you don’t want o fire anyone.  Either way optimizing for very popular search terms will not result in a positive return on your investment in the short term.

Before I go into why, let’s discuss “very popular search terms.”  Clearly “Chicago real estate” (with 31.1 million results) or “Las Vegas homes for sale” (with 9.7 million results) qualify as very popular search terms.  What about “Bethesda real estate” (with 869 thousand results) or “Homes for sale in Traverse City” (with 159 thousand results)?  Probably yes, still quite popular.  Even a search for “Granby CO homes for sale” with only 30 thousand results looks pretty popular.  These search results can seem very daunting for those of us with pretty small marketing budgets.  On the other hand I would suggest that this is not where you want to compete anyway.  These simple search queries “,city. +  real estate” are the targets of all the internet aggregators like Zillow and Trulia but this is not where you want to be.

Let’s now switch our focus to “How prospects use the internet.”  We have examined user behavior and classified searches into three phases:

1)       General Searches, like the ones mentioned are the place where many prospects begin their research process. To position your website to be found for this type of search will typically require the largest investment.

2)       Searches for specific locations (subdivisions, in a specific school district, etc.) or Searches for features (waterfront, granite counter tops, etc.) and

3)       Searches for streets or specific addresses

Now let’s build a profile for a typical visitor that comes to your site from each of the Three Phases of Search:

General Search Visitor: This person has typically just started their quest.  They are early in research mode.  They often don’t even know what they are looking for themselves.  Someone searching for a home in Chicago by typing in “Chicago homes for sale” still has to decide on the best area, features, etc.  The one advantage of connecting with a visitor at this time is that they probably have not engaged a real estate agent yet.  If they do give you their information at this time and you are able to set up an appointment you should expect to show this customer a lot of properties before they are ready to make an offer.  Of course there are always exceptions to this rule.   I’m just not sure I would spend the money on SEO to find those exceptions.

Visitor Searching for Specific Locations and Features: At this point your visitor has an understanding of what they want and where they want it.  They are still looking but are now zeroing in on what they feel will be their perfect home.  For example someone looking for “the Links at Poplar Creek” Hoffman Estates has done enough research to know where they want to live and here’s the best part – your website will be competing with under 6,000 other results on Google.  Another actual search example: four bedroom double bay window houses for sale in Birmingham brought a customer to our site. Search visitors in Phase 2 have enough information to be ready to make an offer when they find the right property.  Now is when the guidance and support of a real estate agent is most needed and will add the most value.

Searches for Streets or Specific Addresses: These visitors are in buy mode.  They think they know exactly what they want and have their wallets out and on the table.  The fact that they are still searching on the internet is an indication they still need an expert to help them close the deal on the perfect home.  But these visitors are so far down the search process they are the ones most likely to already be working with an agent.  We can not read people’s minds,  sometimes people start with a narrow focus but then broaden their search parameters.  For example the search: Hazel Drive house for sale in Petoskey brought a visitor to our site that spent the next 18 minutes viewing 45 different pages.  And the visitor that searched for: 9107 East Starhill, Lonetree then spent the next hour and a half viewing different homes listed on our site.  BTW only 21 websites showed up for this search.

Okay now we know what Google wants and we know what we want from Google, next we discuss how to match this up and achieve SEO success with your website.