Whats the max you would pay for a lead? Then if the deal closes, you pay 25% referral fee and apply the cost of the lead to the referral...thoughts?

Asked by BayAreaHomeRebate, Vallejo, CA Sun Nov 27, 2011

What if you were able to get a good lead at a low upfront fee? If the deal closes, then pay 25% referral? Would you do this? Now these leads would be exclusive and won't be sold to any other agent. How much would you budget monthly towards your marketing budget?

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14
Annette Law…, Agent, Palm Harbor, FL
Mon Nov 28, 2011
BEST ANSWER
Sameer,
You've heard from many veteran and very successful real estate professionals who have been thought through experiences, 'Never Pay For A Lead." Each of these agents, myself included, know we are better able to get responses from those most likely to do business with us.

For all we know, the leads you are supplying could be from an Ad that simply states, "If you are a homeowner or are looking for a home, sign up for your Free gift." However, I do like your offer to apply the lead fee as a credit taken from the referral.

Now, the greatest issue in regards to lead generation, for those who are selling such leads, is realizing the ability of the agent to properly cultivate and mature the contact into a business position is essential. A perfectly good lead can be ignored to death. While a truly inappropriate lead consumes time and resources only to evaporate overnight.

Until you are able to breach this chasm of uncertainty, the professional response will be a resounding no, with the exception of all those newbies who will sign up and be out of business before the next 4th of July.
You, really, really, really, really need to reveal exactly what you bring to the game for a 25%(Wow!) referral fee. This is a dinosaur of a concept too many brokers are grasping onto that will not serve them well.

Now, if you were to prove the integrity of your leads...and NO 25% referral, (that is ridiculous) and a proven 25% conversion rate, I would consider 25 to 50 bucks a pop up to 10 a month. (Don't call)
1 vote
Michael Cheng, Agent, San Jose, CA
Mon Nov 28, 2011
I've not paid for a lead yet, but I've not ruled out that possibility entirely. As for a referral, you pay what makes sense for you. If it's profitable, I could see paying up to 40-50%.

And, it's quite amusing that there are some agents who subscribe to Trulia PRO and vehemently claim they don't pay for leads.
Web Reference:  http://www.archershomes.com
3 votes
Lance King, Agent, San Francisco, CA
Mon Nov 28, 2011
We are constantly approached by lead-generating firms with lots of different models, but their models tend to be different flavors of we'll send you a lot of junk but every once in a great while you'll get a client and it's worth it.

No, it isn't. We would pay well for leads that are qualified, definition of qualified meaning that the potential client has either responded to an email or phone call confirming they are real. Anything else is a major waste of time.

As for your specific model, we would pay a referral fee or a flat rate, not both.

Best Regards,

Lance King/Owner-Managing Broker
lance@fixedrateproperties.com
415.722.5549
DRE# 01384425
1 vote
Jo Soss, , Bremerton, WA
Mon Nov 28, 2011
Whenever one of those companies call me and start off by telling me they have a buyer for XX city. I say, great! I will give you a 25% referral fee when we close! Of course they get all confused! haha! I would purchase a product that generates leads through an IDX home search - but I won't just pay for names and email addresses.
1 vote
Erica Ramus,…, Agent, Pottsville, PA
Mon Nov 28, 2011
I would never pay for a lead. Period. Nothing ever up front.
1 vote
Christopher…, Agent, Tarrytown, NY
Mon Nov 28, 2011
Hi, I don't and won't buy leads. I've learned over the years that a large number of leads dissolve, and the rest are converted into a client. I thinks it is important to fully understand how the lead generator is qualifying the leads you purchase, if you do. They way I qualify my leads and they way another qualifies them can be very different. I have the gift of understanding a person's motivation very early on by the things that they say, also by asking the right questions.

Christopher Pagli
Licensed Associate Broker
Accredited Buyer Representative
GREEN Designated Agent
William Raveis Legends Realty Group
914.406.9023
1 vote
Carmen Brode…, Agent, Scottsdale, AZ
Tue Nov 29, 2011
I never pay for leads, but if an agent refers another client to me I am happy to pay a 25% referral fee.
0 votes
BayAreaHomeR…, Agent, Vallejo, CA
Mon Nov 28, 2011
Thank you for all your responses. I think we can all agree the lead quality is most important with no upfront fee until the deal closes. Now as far as the deal actually closing? I think if you can get more information rather than stuff like, " I would like a CMA" on my property" or "I'm interested in buying a home" More like, I'm interested in a short sale, and my lender is, "x" I qualify for a short sale because I have less than " x" in assets and I make "x" amount of money.

Thanks again for all your responses and if you have any questions about my question feel free to contact me anytime.
0 votes
Laura Coffey, Agent, Santa Clarita, CA
Mon Nov 28, 2011
I would never pay for a lead. I do offer agent to agent referral fees at 25 - 30%. I also have relocation accounts where I have to pay a referral fee but all that is paid at the close of escrow.
0 votes
Scott Hulen, , 64068
Mon Nov 28, 2011
There are companies who business model it is to sell leads, advertising and marketing. It really depends on the business model of the company as far as how well it works. Service magic sells leads to plumbers, electricians and many other skilled and unskilled trades in the service industry the leads are sold for between 5-50 dollars an example might be mow a lawn 5.00, build a custom home 50.00. The problems with the system is the leads are usually not exclusive to one company nor in the case of build a custom home are they preapproved or have the resources and commitment to do so. I would pay big money (500+ plus 25%) for a ready willing and able client, but I have not found a service that can provide that in the custom home market. So in the meantime I’ll have to do my own work and continue wearing many hats and keep throwing up those mid-court shots. ps I found that many " leads" are junk leads and would not pay upfront $$$ for leads in this industry ( my "leads" from trulia maybe 1 out of 30 or 40 work out, many are just fishing expedations for short sales which will NEVER happen at the listed price because the bank will not accept the deal )
0 votes
Debra (Debbi…, Agent, Livingston, NJ
Sun Nov 27, 2011
I'll chime in........i wouldn't pay upfront for a lead..........the referral fee should more than suffice...........I will be the one spending my time and money in the hope there will ultimately be a sale/closing.

The risk of wasting one's time is on my soulders........not the referral company
0 votes
Mack McCoy, Agent, Seattle, WA
Sun Nov 27, 2011
Hmmm. I get a division by zero error . . .
0 votes
John Souerbry, Agent, Fairfield, CA
Sun Nov 27, 2011
I agree with Linda, never pay up front for a lead.
0 votes
Linda S. Cef…, Agent, Franklin, WI
Sun Nov 27, 2011
I would not pay one penny upfront. If the lead generation company is so sure that the leads they give you are good, then they should be willing to get paid at closing when I get paid. And if there are a few that aren't so good, oh well that would be their loss and mine as well.
0 votes
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