“Let me think about it,” were Chris’ last words.
They weren’t the last words of a dying man but the ones of a seller prospect about to hang up the phone on a real estate agent.
Due to the current market situation, seller leads are in higher demand than buyer leads.
The inventory is still low.
However, there are signs that this may change in the not-so-distant future.
I hope you never have gotten to the point of begging a seller to work with you.
That’s not the best position to be in regarding sales psychology and persuasion.
But after only getting unmotivated seller leads, I can understand a thought like that may have crossed your mind for a short millisecond in such a market.
During my research, I came across several articles on seller lead generation.
They give decent general tips such as…
- Cold calling expireds & FSBOs
- Renting your zip code
- Using predictive analytics via Offrs
- Working for a broker with established listing agents
- Targeting distressed homeowners
- Using an action plan for lead nurturing and automation
- Using your sphere of influence via a CRM (database marketing)
- Partnering with local service providers/business owners (referral marketing)
- Partnering with real estate investors
- Doing open houses
- Targeting high-end rentals (tenants)
- Changing the real estate niche or focusing on a new one
- Using home valuation landing pages and sending cold traffic there
- Content marketing (e.g., Blogging, etc.)
- Sending “Just Sold” postcards
- Purchasing seller leads
- Door knocking
- Social media ads
That’s all fine, but it’s just an unstrategic mix.
Having this information means you don’t know where to start, let alone what to focus on.
To look for water in the current “seller-dessert” strategically, we must start with the end in mind.
So, my aim for this article is to make this seller lead generation approach more evergreen.
Since no one is doing that, I will – which leads me to the first thing we need to do…
Starting with the End in Mind (Your Goals and Constraints)
Let’s assume you want to make an annual income of $150,000 in gross commissions and reach this goal within one year.
So, these are your financial and time goals.
Now, suppose you are already an established real estate agent or broker.
In that case, this may already be your income, so there is no need to do anything unless you want to 5x it.
It could also be a feasible goal.
Because you have a monthly marketing and lead generation budget of $2,000 and more, an extensive database and additional time are available for “free” outbound lead generation.
On the other hand, it just may not be a feasible goal when you are just starting out.
You may not know what to focus on and thus don’t have much time available and a monthly marketing budget of between $0 and $100.
Still, it may be viable to reach the financial goal of $150,000 in annual gross commissions in three or five years instead of just one.
So, where am I going with this?
When defining an income goal and the time you want to reach it, you also want to check if this is viable under your circumstances.
But how will you know how your circumstances will affect the lead generation options available?
Without this information, it is difficult to assess whether goals are feasible or not.
To better get this point across, let’s use a case study.
The Case Study of the Average Joe Real Estate Agent
Average Joe makes $48,340 per year as a real estate agent.
This is the average income for real estate agents in 2021, according to this source.
But Joe wants to make $150,000 within 12 months. This is the average income of agents with four to ten years of experience (source).
Joe primarily needs to generate seller leads, but how can he approach this?
Let’s crunch some numbers to break this income goal down to a monthly level.
First, he must make $12,500 monthly gross commissions ($150,000 divided by 12).
The average home price in 2022 is $348,000 (source), and the average commission is roughly 5%.
Let’s assume that 50% of this commission goes to the broker.
So, the average real estate agent makes roughly $8,700 on a $348,000 ($348,000 x 0.025) home sale.
Joe thus needs to sell 1.43 houses per month ($12,500 divided by $8,700) to reach the monthly commission income goal of $12,500.
Now, things will get a bit more complicated.
These numbers assume Joe starts selling houses from month one.
When starting with a new lead generation campaign, we know this is unrealistic.
Joe will need a “runway” of 3 to 6 months to make a lead generation campaign work.
Moreover, we must also consider that the house may not be show-ready. So let’s add an additional month.
Considering all this, the seller lead generation campaign may start working in month six. Still, he cannot begin selling until month seven.
Let’s stay pessimistic with a seven-month “runway.”
This means he only has 5 months to reach his goal.
So, in these five months, he has to sell 3.43 houses per month to reach the income goal.
In other words, he needs to make the seller lead generation campaign work so that he gets enough leads from month seven onward and can start selling houses in month eight.
Thus, the campaign should aim for 3.43 monthly house sales from the start.
How many real estate seller leads per month does he need for that?
This number will depend significantly on his phone and in-person sales skills.
What he is selling is the listing contract.
While there is something like an average closing rate (27%) I already mentioned in this article, let’s stay pessimistic and say Joe gets 10% of seller leads to sign a listing contract.
So, he will need 34.3 seller leads per month (3.43 house sales divided by a 10% closing rate).
Now that we know Joe’s number of monthly seller leads, we can move to the next phase…
Based on the Goals, What Type of Seller Leads Do You Need?
Before we jump right into the different types of real estate seller lead generation methods, there is one more step.
What is this step?
It’s to consider the problem and need awareness of different lead generation methods and whether they align with the goals.
For instance, if Joe would now go for seller lead generation on Facebook, he would definitely not reach his goal.
Because most leads generated on Facebook are unaware of their needs.
They may be interested in selling their home a year from now.
But that’s not something Joe can work with.
So, he wants to consider first what type of real estate seller lead he needs to reach this goal.
It needs to be sellers that want or need to sell right now. The type of seller lead Joe needs to focus on is, thus, at least a warm lead.
I already covered different types of real estate leads in this article.
The time constraint to reach his goals excludes many different real estate lead generation methods more suitable for the long game.
The “long game” means seller leads who can be reached now but are not ready yet.
It also means the lead generation method will take longer until it unfolds its full effect (e.g., content marketing, such as blogging or posting on social media and other inbound marketing methods).
So, on the one hand, Joe will need to use one or more lead generation methods with a high likelihood of reaching at least warm or hot prospects.
He will also need to consider the real estate niche where warm or hot seller prospects can be reached.
Which lead generation methods are available for warm and hot prospects, and what type of sellers does he need to target?
Regarding the lead generation methods available, it is primarily outbound lead generation, such as…
- PPC Ads on search (this can be both outbound and inbound, depending on the way you run the campaign)
- Cold calling
- Direct mail
- Native ads
And what about the type of sellers Joe needs to target on one or more of the above lead generation channels?
It’s sellers that would think something like the following:
- “How and with who’s help can I sell my property as soon as possible?”
- “I want to work with you to sell my property, but I am not completely convinced about your services yet.”
That’s usually motivated sellers, such as…
- Pre-foreclosures (with reservation)
- Uncontested divorces
- Beneficiaries of inherited properties where estate planning was done before (not probates, here is the reason why)
- Absentee owners
- Burned-out landlords/retiring investors
- FSBOs (with reservation, risk of dreamers)
I didn’t include probates and contested divorces because they can lead to significant delays, which would work against Joe’s goals.
While pre-foreclosures may not be interesting for the traditional commission income, they may work for realtors knowledgeable about creative real estate strategies.
Now, what’s the next step?
Let’s translate the 34.3 qualified seller leads per month Joe needs into what it means for the identified lead generation methods.
I prepared an overview table for that below. The costs per lead are based on my article “Real Estate Lead Cost – Should Realtors Buy Leads?”
|Lead Generation Method||Cost per Lead||Monthly Costs to Generate 34.3 seller leads|
|Cold calling (ignoring the expenditure of time, only factoring in costs of $0.12 per skip traced property)||-||$205,80|
|PPC advertising with Bing Ads||$56.16||$1,926.29|
|PPC advertising with Google Search Ads||$64.07||$2,197.60|
|Cold calling (factoring in expenditure of time with an hourly rate of $21.60)||$86.40||$2,963.52|
As you can see, in the above table, I used two types of costs for cold calling. One factor is the expenditure of Joe’s time, assuming an hourly rate of $21.60, as I already covered in my article about real estate lead costs.
The other cost type ignores this, considering it is only Joe’s “sweat equity.” Still, he has to pay to skip trace the relevant seller contact information via a tool such as Propstream.
Now we have all the preparation ready to consider the feasibility of Joe’s goal.
If he has a monthly budget of less than $200, it will likely not be a feasible goal to get to a gross commission income of $150,000 within 12 months.
If he has only $300, he should only focus on cold calling one of the above-listed seller types.
A budget of up to $1,500 would allow him to do cold calling, direct mailing, and native ads.
So, as is most of the time the case, the higher the monthly budget, the more options to approach the seller lead generation there are.
But since Joe doesn’t want to scatter his efforts between too many different lead generation methods (in the beginning, he needs to do several test iterations), he may want to focus only on one until it works.
Remember that in the beginning, I assumed a 10% closing rate.
The whole estimation above would implode and endanger Joe’s goals should his phone sales skills lead to a lower percentage and reduce it to 5%.
In turn, the estimation would improve should he have a 15% closing rate instead of 10% and a higher lead conversion rate (e.g., with direct mail) due to excellent sales copy.
So there are many different variables at play.
But the quintessence of this article is that the types of sellers you target for lead generation purposes need to be aligned with your financial and time goals, constraints, persuasion skills, and correct lead generation methods.
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.
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