The real estate world can sometimes feel like a giant puzzle, and one of the exciting pieces is how you find people who want to buy or sell houses (a.k.a. real estate leads).
This article is about two ways to do that.
One is like waiting for your birthday gift—you only see what you get when the big day comes.
That’s the “Pay at Closing” way.
The other is like teaming up with your best buddy to find the most amazing hidden treasures.
That’s the “Partnerships” way.
Both ways sound enticing, but each has its magic touch.
In today’s article, I will analyze both and discuss…
- Five real estate leads pay at closing key benefits and seven drawbacks
- Eight real estate partnership core advantages and six challenges
- Pay at closing leads vs. partnerships: a side-by-side comparison
- Comparing seven different partnership types with real estate leads pay at closing
5 Real Estate Leads Pay at Closing Key Benefits and 7 Drawbacks
Before directly comparing pay-at-closing real estate leads with partnerships, let’s start by weighing the pros and cons of each one.
The 5 Pay at Closing Leads Benefits
No Upfront Costs: You don’t need to pay for leads upfront. This means less risk for you. If you don’t close, you don’t pay.
Motivation to Convert: Since you pay at closing, there’s a big incentive to turn those leads into sales.
Budget-Friendly: Especially for new agents or those on a tight budget. This system can be kinder to your wallet.
Quality Control: Companies might provide better leads because they only get paid when you close. The emphasis is on “might”.
In my article about the various companies offering pay at closing real estate leads, hundreds of agent reviews I analyzed tell a different story.
Trust and Partnership: This system can create trust.
Both you and the lead provider want the sale to happen.
7 Pay at Closing Real Estate Leads Drawbacks
Higher Costs Later: While there’s no initial cost, the fee at closing might be higher than if you paid for real estate leads upfront.
In addition, when the lead quality is poor, your costs per sale often can be higher, too.
Dependence: Relying solely on this system can make you dependent on the lead provider.
Potential for Fewer Leads: Some providers might be cautious and give you fewer leads if they’re unsure about your closing rate.
Delayed Payment Concerns: The lead provider has to wait for their money.
This can impact their cash flow, affecting the quality or quantity of leads they provide.
If you put yourself into their business model, it makes sense that this can happen.
They basically give you a marketing budget credit, take the risk of making a lead gen campaign work, and balance maintaining working lead generation campaigns.
On the other hand, they have to find realtors that can close the leads they generate. If not, they run low on cash pretty fast.
If their cash flow starts to run low or one of the lead generation campaigns reaches a saturation point, they may need to resort to methods using a lower budget to stay afloat.
Not All Leads Convert: Speaking of lead quality, just because you’re paying at closing doesn’t mean every lead is a guaranteed sale.
Many real estate pros have already complained about the bad lead quality offered by several leads paid at closing companies.
Non-Exclusive Leads: Finally, not all providers may be able to offer you exclusive leads.
From their standpoint, this is also an understandable move since they can have several realtors compete for the same leads, thus increasing the chances of closing the lead and covering their downside.
However, for a realtor, this is clearly a con.
Low Chances of Getting Quality Leads in General: Even if you can work with a company that offers exclusive leads, the chances of them sending you quality leads are not the best.
As I pointed out in this article, you have a high chance of quality leads when they fit your target audience so they can be matched with your offering.
In marketing speech, it’s the message-market fit.
However, these companies don’t offer a highly individualized and targeted service.
So, it’s safe to assume that you will need to be quite lucky the marketing message they use in their lead gen campaigns will be aligned with the services you offer in your real estate niche.
8 Real Estate Partnership Core Advantages and 6 Challenges
Now, let’s look at real estate partnerships and their core advantages and challenges.
8 Core Advantages of Real Estate Partnerships for Lead Generation
More Leads: This one is the most obvious advantage. It’s a budget-friendly option to get more leads.
Shared Costs: Spending money on ads or tools? With a partner, you can split the bill.
New Ideas: Your potential partner might have new strategies you haven’t thought of.
Or you can attend more events or meetings and connect with a larger network.
You can also test two marketing channels simultaneously.
Shared Resources: Two agents can pool their money, connections, and tools to reach a larger audience.
Diverse Skillsets: Each partner may bring different skills and strategies to the table, enhancing the team’s overall capability.
Shared Responsibilities: Tasks like following up on leads, attending viewings, or doing paperwork can be divided, increasing efficiency.
Risk Diversification: If a marketing strategy doesn’t work out, the loss is shared, reducing the individual risk.
6 Challenges of Real Estate Partnerships for Lead Generation
Splitting Profits: You closed on a buyer or seller, great…But now you have to share the commission you receive.
Different Views: What if you don’t agree on how to generate real estate leads? It can cause arguments.
Work Balance and Commitment Levels: If one person works harder, it can feel unfair, especially if you share everything 50/50.
Or, similarly, what if you are super serious and the other is more relaxed? That can also be a problem.
Communication: Keeping each other informed and aligned requires continuous and clear communication.
Dependence: Relying too much on a partner can lead to complacency, where one might not actively seek leads or work as aggressively.
Dissolution Complexity: If the partnership breaks, dividing assets, leads, and ongoing deals can be challenging.
Pay at Closing Leads vs. Partnerships: A Side-By-Side Comparison
Now that we have the pros and cons for pay-at-closing real estate leads and partnerships let’s compare the sides.
Pay-at-closing leads offer a flexible, transactional approach with financial benefits tied directly to successful outcomes.
In contrast, ‘Partnerships’ foster collaboration, potentially yielding greater lead volume and shared risk, but require coordination and mutual understanding.
To choose between them, you want to assess your individual goals, preferred working style, and risk tolerance.
The table below provides a clear, side-by-side comparison between “Pay at Closing Leads” and “Partnerships” across various crucial criteria.
|Criteria||Pay at Closing Leads||Partnerships|
|Basic Definition||You pay for leads only when a real estate transaction successfully closes. It's a results-based approach.||Two or more agents or entities collaborate, pooling their resources, networks, and expertise to generate leads and close deals.|
|Financial Aspects||No initial costs, but the eventual fee at the time of closing might be higher than traditional lead acquisition.||Resources, including finances, are often shared. This can make certain investments more affordable, but the returns (like commissions) are also divided.|
|Risk and Commitment||Lower upfront risk since you pay only for successful outcomes. Dependency on the lead quality from the provider.||Risks and responsibilities are shared. However, potential for disagreements or divergent goals can introduce challenges.|
|Lead Volume and Quality||The provider may (emphasis on "may") offer quality leads since their compensation relies on successful sales. Limited number of leads based on provider's assessment.||Combined networks can result in a higher volume of leads. The quality will depend on the combined reach, reputation and how well target audiences and niches align.|
|Flexibility and Autonomy||More flexibility with no long-term commitment to another party. Agents can pivot as needed.||Less individual autonomy due to needed consensus. Partnerships can enable larger strategies, like bigger marketing campaigns.|
|Long-Term Engagement||Primarily transactional. Relationship with the provider remains largely commercial after payment.||Leads to lasting professional relationships with potential for long-term collaboration and continuous lead sharing.|
Comparing 7 Different Partnership Types with Real Estate Leads Pay at Closing
To complement the table above, I also analyzed the different real estate partnership types and compared them to the real estate leads pay at closing model.
|Strategy||Description||Pros||Cons||Comparison to "Paid at Closing"|
|Partner with a Busy Real Estate Agent||Partnering with a top agent to handle overflow leads.||Mentorship, steady stream of leads.||Overshadowed by main agent.||More direct and personal approach; potentially less risky than "pay at closing".|
|Relocation Deals||Partnering nationwide for people relocating.||Wider network, diverse clientele.||Requires broad market knowledge.||Less localized and more labor-intensive than "pay at closing".|
|Real Estate Referral Network||Joining a network of agents exchanging leads.||Wide reach, potential for new markets.||Membership fees, competition.||More about building and maintaining relationships than "pay at closing".|
|Lender Referrals||Getting leads from mortgage lenders.||Pre-qualified buyers, ready to purchase.||Dependence on lenders, potential for conflicts of interest.||More direct referrals, whereas "pay at closing" might have diverse lead sources.|
|Military Affiliated Banks||Serving military clients seeking homes near bases.||Reliable clients, housing allowances.||Need knowledge of VA loans and military requirements.||Paid at closing" is broader, while this is a niche market approach.|
|Friends and Family||Leverage personal networks for leads.||Trust is already established, personal connections.||Potential complications in mixing business with personal.||More organic and personal compared to the transactional nature of "pay at closing".|
|Commission Advances||Accessing commission before deal closes.||Immediate cash flow.||Fees and potential loss if deal doesn't close.||Not really a lead source. It's more about financial management than "pay at closing".|
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.
- Real Estate Leads Pay at Closing vs. Relocation Deals - October 7, 2023
- Pay at Closing Real Estate Leads vs. Upfront Payments - October 6, 2023
- Real Estate Leads Pay at Closing vs. Partnerships - October 5, 2023