If you are wasting time with real estate leads, one reason is likely not (dis)qualifying them enough.
This article will show how the proper real estate lead qualification can make you more money, even though your cost per (unqualified) lead goes up.
I will use an example of two real estate pros, Peter and Bob.
One does rigorous lead (dis)qualification, and the other does none.
So, my article will cover…
- What (Real Estate) lead qualification or rather lead disqualification is.
- Why it can make you more money.
- How to find the right real estate lead qualification questions is understanding the 5 levels of product and service awareness.
What Is (Real Estate) Lead Qualification… Or Rather Lead Disqualification?
Real estate lead qualification is actually a disqualification process.
Disqualifying real estate leads helps protect your time and money so you can invest it in improving your real estate lead generation methods.
Or you can sell to leads that do qualify instead.
To some degree, all efficient sales processes are disqualifying, at least at the beginning of the sales funnel.
For example, let’s use two real estate agents: Bob and Peter.
Both have been running a lead generation campaign on Facebook to generate seller leads.
These leads need long-term nurturing with a sound follow-up system since potential sellers on Facebook have often just started thinking of selling and potential buyers of buying.
Some may be dreamers and seem serious, but they are not.
Nevertheless, they leave their contact information in your Facebook lead form.
Back to Bob and Peter. Both generate 100 leads, and they start calling them.
Bob is a real estate agent who doesn’t take “sh*t” and has no issues firing a prospect.
On the other hand, Peter qualifies leads by accident at most and wants to always be the nice guy.
Who do you think will know sooner know…
- How to tweak the Facebook ad campaign to pre-qualify potential leads even better?
- What the percentage of serious sellers he gets from the campaign is?
And who do you think can invest his time earlier in running other lead generation campaigns or doing whatever is essential in his business?
It’s not Peter. It’s Bob.
Well, Peter is still talking to Marry (lead number ten), who can talk about her life problems for the first time in two weeks as her psychotherapist is in Hawaii getting therapy herself.
Bob is already done with lead number 60. He already knows only three are not dreamers or people who clicked on something while having too many Mojitos watching cat videos on Facebook.
Because Bob asks the right (dis)qualification questions.
Why Real Estate Lead Qualification Can Make You More Money
From the two agents I presented earlier, I already mentioned the benefits at least Bob could experience by asking the right (dis)qualification questions.
He knows faster if and how his lead generation campaign performs, no matter the marketing channel (in our example, Facebook).
It also helps him to know faster than Peter what type of leads are attracted by the type of ad and the audience targeting on Facebook.
He can then tweak and optimize the lead generation campaign earlier than Peter, thus increasing the lead quality.
The cost per lead may go up since he will use some pre-qualification already in the ad copy.
However, since the subsequent bulk of generated leads likely has increased quality, he may get five or six this time instead of calling one hundred and qualifying three as serious.
So, his cost per qualified lead will likely decrease.
Peter will likely never get to that point.
He is missing the necessary data he could have gotten had he sufficiently (dis)qualified the leads he called.
I will show this better with the help of a comparison table I prepared below.
You will then better understand how higher costs per lead can lead to lower costs per qualified lead.
|Bob Who (Dis)Qualifies Leads||Peter Who Does Not Really (Dis)Qualify|
|First round of leads|
|Number of generated leads||100||100|
|Cost per lead||$10,00||$10,00|
|Total ad spend||$1.000,00||$1.000,00|
|Number of qualified/serious leads after 5 days||3||0|
|Cost per qualified lead||$333.33||unknown|
|Second round of leads|
|Number of generated leads||100||Peter is still talking the nice lady with psychological issues|
|Cost per lead||$13,00||-|
|Total ad spend||$1,300||-|
|Number of qualified/serious leads after 5 days||6||-|
|Cost per qualified lead||$216.67||-|
As you can see in the table with the assumed numbers, the cost per lead increases slightly.
Why is that again?
When Bob changes the ad copy for his Facebook campaign so that it (dis)qualifies more people seeing the ad, fewer people will convert.
That’s bad news only at first glance.
Bob does this based on the information he could gather from his (dis)qualification calls with the leads generated in the previous campaign cycle.
Now, since I assume the same costs per click, the costs per lead will go up (fewer people will click and fill out the form).
But once he calls these new leads, the chances that more of these people qualify for what he has to offer increase.
So, more qualified leads are generated.
From the numbers I used in the table above, he reduced the cost per qualified lead by 54%.
When Bob’s cost per qualified lead was still $333 after the first ad campaign cycle, it is now down to $217 after the second round.
Generating more qualified leads for Bob also means higher chances of closing more of them and earning a commission check or a wholesale fee (should he be an investor) in the future.
So, in the end, the strict (dis)qualification process leads to making more money.
Bob can collect important marketing performance data and steadily improve the campaign further and further, getting more and more quality leads.
However, Peter’s cost per qualified lead is still unknown.
Remember the lady missing her therapist? She is still on the phone with Peter.
Well, I am slightly exaggerating, so she is probably not.
While Peter may still work pretty slowly through his leads, the costs per qualified lead may be higher. Why?
Because when Peter gets to lead number 30 or 40, several weeks may have passed.
After that time, many people will not remember having filled out a form on Facebook anymore.
Even Bob may have probably talked to (and disqualified) them already.
So this is how the (dis)qualification of generated leads can make you money or cost you more than necessary if you fail to do it (like Peter).
Finding the Right Real Estate Lead Qualification Questions Is Understanding the 5 Levels of Awareness
Many sources suggest different real estate lead qualification questions, but only a few, if at all, tell you why.
It depends on the five product and service awareness levels a seller or buyer lead can have.
And depending on the level they have, the lead is either cold or hot.
The fifth one is the most aware level. It’s people who are already your clients, did business with you, and refer you to friends and family because they are happy with your services.
Therefore, the (dis)qualification concerns prospects on the first four levels.
My article “5 Types of Real Estate Leads and The One Mistake Most Make” covers these levels, the customer journey, and how this already ties into the hotness and coldness of leads.
As a reminder, I will again include the infographic I used in this article.
It also helps explain the reason behind the ideal real estate lead (dis)qualification questions.
First, here are things a seller/buyer lead could say or think about on the different product and service awareness levels.
1) Unaware of the problem/need (ice-cold lead): “Selling/buying hasn’t crossed my mind yet.”
2) Aware of the problem/need (cold lead): “I may need/want to sell/buy.”
3) Aware of solutions for their problem/need (warm): “How and with who’s help can I sell/buy my property?”
4) Aware of services/products for their problem/need (hot): “I want to work with you, but I am not completely convinced yet.”
5) Most aware of services/products for their problem/need, you being their solution of choice (hottest): “You did an awesome job, and I want to work with you again. I even know someone I will refer you to.”
What comes up repeatedly in the above levels leading us to the first and most crucial qualification question alongside all the others we can use?
Exactly, it’s the buyer’s or seller’s problems or needs. Most of the other questions following this one indirectly relate to this most important one.
Thus, the first (dis)qualification question you may want to ask a seller lead is this: “Why would you like to sell your home?”
Using a bit of reverse psychology, you may add something like: “Why would you like to sell this beautiful home of yours? Don’t you want to enjoy it a bit longer?“
Suppose the answer is something like: “Oh, I was just checking on current home values and for how much our home could sell at the moment. Then something popped up on Facebook (your ad) while I was sipping my Martini where you could get a free home evaluation. But we haven’t thought about selling just yet. Maybe in a year or two.“
Then you know they disqualify, and there is no real need (yet). These leads are likely on the first unawareness level.
The first question to the buyer lead: “Could you tell me why you want to purchase a home?“
Or, with a bit of reverse psychology again, it could be something like: “Why do you want to purchase a new home, isn’t it a great place where you are living now?”
An answer could go like this: “I just got a promotion, and need to move within the next two weeks to your area. So I need a new home as soon as possible to start my new position.”
That’s an answer we can work with. This buyer lead is hot.
Regarding product and service awareness levels, they are aware of your services.
If they weren’t, they wouldn’t have contacted you.
But the lead may not yet be completely convinced about working with you.
These leads may also be already in contact with your competition.
However, depending on their answers (if they omit one piece of information), it will not be possible to determine what product and service awareness level they represent.
So, we need another piece of information that helps in cross-checking.
What is that piece of information?
When you look at the infographic again, you will see the arrow on the left labeled with the word “urgency.”
The arrow itself symbolizes time.
And that’s what we need to check next for our cross-check.
Still probing the need, we now ask the buyer or seller lead about their time frame or plans regarding buying or selling to determine their urgency.
So, here is the second question for the seller lead:
“When would you like to start selling your home? Is this something you want to do in a week, a few months, a year?“
And the second question to the buyer lead:
“Suppose I have the ideal home for you right now, when would you like to move in?”
The next thing you need to test is the chance of your business becoming their first choice.
This is more relevant for warm and hot leads (further down the product and service awareness levels).
So, the third question could be: “Are you already working with a real estate agent or brokerage (exclusively)?”
You will enter a game of juggling with raw eggs if they do.
The potential client could drop you like a hot potato. So when they answer yes, they are likely disqualified.
Next, we will have to check the overall feasibility. That is provided you didn’t have to disqualify the buyer or seller lead already with the last questions.
Checking the feasibility is not related to the above product and service awareness pyramid.
However, one thing is having a need or problem, being aware of it, and knowing about solutions on the market.
Another thing is being able to commit and move forward to solve the problem or need with the help of others (e.g., you).
To probe the feasibility of moving forward with a seller lead, you want to check the following:
- Can you reach an agreement in terms of pricing the home competitively?
- Is the seller lead the person authorized to sell the property in the first place (e.g., not necessarily clear with probate leads (my article))?
- Can the seller lead commit to working with you by signing a listing agreement?
- Are there any property liens?
To probe the feasibility of moving forward with a buyer lead, you want to check the following:
- Does the buyer lead want to move to your area, or is this a buyer lead for an out-of-state property (in which case you would have to work with another agent)?
- Is the buyer lead pre-approved by a lender?
- What is their budget?
- What are the home requirements (e.g., number of bedrooms, etc.)?
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.