Real estate prospecting is one of the marketing tasks that most real estate professionals need to do regularly.
Most of the time, it is synonymous with picking up the phone. But this is just one way of doing real estate prospecting.
You can do that in many different ways, and each method has advantages and disadvantages.
And while looking for different ways, at some point, you might ask yourself what the different conversion rates of these might be, so you can compare them a bit before you start.
For this reason, I wrote this article, providing you with 11 different real estate prospecting methods and their respective conversion rate estimations and a nice table at the end with an overview of all of them.
So, please keep reading.
Oh, and here, you can learn how to increase your real estate lead gen success rate with a new tool I created.
The Definition of Conversion Rates in Real Estate
To understand the term “conversion rate” in real estate, we first need to know how conversion is generally defined.
So a conversion is when a prospect takes action toward a particular goal for your sales or marketing efforts.
These marketing efforts include a phone call after a direct mailing campaign, a new email subscriber, a listing contract signed after a sales conversation, a text message inquiry from your property listings on your real estate website, etc.
And conversion rate, in general, is a key marketing performance indicator often used in CRO (conversion rate optimization).
It is the ratio between the conversions you get and the prospects reached (online or offline).
Therefore you can define conversion rate in real estate as the ratio between the number of conversions you get and the number of prospects reached via different real estate marketing methods and channels.
What is Real Estate Prospecting?
Real estate prospecting falls into the category of outbound or, in other words, push marketing.
Push marketing happens when your focus is rather on actively putting your service in front of the customer.
Instead of the potential client being attracted to your services and coming to you, you come to the potential customer.
It usually aims to reduce the time between a potential client finding your product or service and buying it.
That’s why it is a bit more aggressive than pull or inbound marketing, where you would rather wait for the potential client to come to you.
Clients coming to you are done via inbound marketing methods, such as real estate content marketing, for example,
Push marketing is often another word for traditional marketing.
Some examples are:
- Direct sales to customers
- Cold calls/ outbound calls
- Radio ads
- TV ads
- Mobile push notification ads
- Email Ads
- Direct mail
- PPC advertising
- Native ads
So now that we know that real estate prospecting is part of push or outbound marketing, let’s see what it usually refers to.
It is rather associated with some sort of outbound sales communication by phone, text, email, or door-knocking.
An example would be the real estate agent picking up the phone to start a conversation with potential customers.
These are often cold calls or “warm” calls.
Prospecting is prone to procrastination because the chances of rejection are high.
No one likes to be rejected because it can cause negative feelings, such as humiliation, embarrassment, and more.
Nevertheless, if you look at the actual conversion rates of prospecting, you may leave some money on the table if you don’t do it.
And if you do it similarly to real estate content marketing, it needs to be done regularly.
Since we live now in the digital age, we must include digital push or outbound marketing methods such as PPC ads ( search ads being borderline inbound) in the following section.
11 Types of Real Estate Prospecting and Their Conversion Rates
This section discusses the different real estate prospecting types and their respective conversion rates.
At the end of my article, I will provide a nice overview table to find the different real estate prospecting types and their respective conversion rates.
Cold Calling [Including Circle Prospecting]
I already discussed this subject in this article, and it is one of the oldest marketing methods in sales.
You call a potential customer you never interacted with before and never showed interest in your services.
Usually, no appointments are made before the call, and it is thus also part of interruption marketing.
Calling expired listings, FSBOs, and circle prospecting should also belong to the cold calling category.
They are all just different types of cold calling, just targeting different potential seller types.
The expired listing sellers are the ones that are often disappointed by their former agents.
The FSBO sellers are the ones that need a break from agents, and the ones you target with circle prospecting are generally the people in a geographic area that may think of moving for various reasons.
Like many prospecting methods, it is not very popular since it can often come at the wrong moment for receivers when the potential client is occupied or doesn’t need your service in the first place.
Doing cold calls can mean many rejections before getting good results.
So to be successful at it, one key is to handle rejections and have a good amount of resilience.
What about the conversion rates for cold calling? You can expect a conversion rate for meetings or appointments of 2%.
Calculating the Costs:
You will need to make 50 calls (1 divided by 2%) to make one conversion.
You may be able to make 12 calls per hour, which translates into 4 hours.
Assuming an hourly rate of $21.60 per hour would mean total costs of $86.40 ($21.60 x 4) to convert one lead to an appointment.
The overall closing rate I discussed in this article is 27%.
This means you will need to convert 3.7 leads to appointments to close one.
Your costs to close one lead would be $319.68 ($84.50 x 3.7 leads).
Calling Expired Listings
When calling expired listings, you call homeowners who didn’t manage to sell their homes with the help of a real estate agent or other means.
But they still need to sell their home.
The tricky thing is that if they had their home listed with a real estate agent, and if you are one, you will need to convince them to do a better job this time.
So one of the critical things on the phone with the owner will be to find out why it didn’t sell.
What about the conversion rates for calling expired listings?
The situation with conversion rates for calling expired listings is similar to cold calling because, basically, it is cold calling.
You can expect a conversion rate between 1% and 3%. (source)
Calculating the Costs:
We can assume the same costs as cold calling.
Calling FSBOs
This prospecting method is actually also a type of cold calling. It is similar to calling expired listings.
The difference is that the respective property owners are convinced they don’t want to work with a real estate agent or professionals.
It’s usually because they prefer not to pay a commission.
So if you happen to be a real estate agent, the main goal in a conversation over the phone would be to convince them that using a real estate agent (you) will be beneficial.
What about the conversion rates for calling FSBOs?
Again, it’s basically cold calling, and you can expect a conversion rate for meetings or appointments of 2%.
Calculating the Costs:
Here again, we can assume the same costs as cold calling.
Real Estate Direct Mailing or Prospecting Letters
You can already find an in-depth article about real estate direct mailing on this page.
A variation of direct mailing is sending out prospecting letters to your neighborhood.
In these letters, you could share a general comparative market analysis.
This is more like a content marketing approach in which you provide some educational value and, by doing that, can warm up the potential customers that you would call afterward.
The traditional direct mailing approach is sending out postcards or letters with a more direct sales message (sales copy) in them to promote your real estate services.
What about the lead conversion rate for real estate direct mailing?
As analyzed in this article, you can expect a lead conversion rate for direct mailing of 6.6%.
Calculating the Costs:
I calculated the costs per acquisition (costs per lead) and per sale in my article mentioned above, which are $24.46 and $244.60, respectively.
Real Estate Door Knocking
When you do door knocking, you select a particular neighborhood, take your car or alternative transportation means and go from house to house, where you knock and hopefully get the door opened by a potential seller or buyer.
Once someone opens their door, the next goal is to start a (sales) conversation and determine whether they need your real estate services.
If you want to dig deeper into this topic, you may also want to read my article on door-knocking here.
Calculating the Costs:
I wrote an article not too long ago about door-knocking. In it, I learned that you could achieve a lead conversion rate or response rate of 20% and a sales conversion rate of 2%.
Considering all the costs involved, I calculated a cost per lead of $15.65 and a cost per sale (e.g., getting the listing contract) of $156.55.
Text Message Prospecting
While prospecting is mostly associated with making calls, it can also be done via text messages.
Phone numbers for that should be collected with white hat methods.
By the way, collecting phone numbers from FSBO listings can also be counted as “white-hat.”
Text message prospecting can be done via social media, such as Twitter, checking for relevant hashtags and engaging with potential customers.
To find the right hashtags, you first need to know which type of real estate lead you want to target.
On Facebook and LinkedIn, it would be using direct messages.
Here, you can use different Facebook groups where the chances are high of finding your potential target clients.
A way that is less of a push tactic and more pull is having a website chat to engage with website visitors live.
Besides, prospecting text messaging should also be part of your omnichannel real estate follow-up strategy, which I already covered in this article.
What about the lead conversion rate for text message prospecting?
According to this source, text message advertising has a conversion rate of 16% for appointments.
So we can confidently assume that the same or at least similar is true for text message prospecting.
Calculating the Costs:
We can assume that you can send a similar amount of text messages (also having a short conversation) than doing cold calls.
So it would be 12 text messages per hour.
You must send 6.25 text messages (1 divided by 16%) to make one conversion.
So you would need roughly half an hour.
But you will also have to collect 6.25 phone numbers beforehand. So let’s add another half an hour to weed through different FSBO websites to find these.
Assuming an hourly rate of $21.60 would mean total costs of $21.60 ($21.60 x 1 hour) to convert one lead to an appointment.
Applying the 27% overall sales closing rate, you would have costs per sale of $80 ($21.60 divided by 27%).
Radio Ads
Many consider radio a marketing channel of the past, but it’s still not completely old school.
It had its fair changes over the years and went from traditional FM programming to digital alternatives.
But nevertheless, listening to news and music is still alive.
For small businesses, radio can be a good option for advertising.
Before you advertise on the radio, you want to know which radio stations target the kind of audience that your potential customers might be part of.
What about the lead conversion rate for radio ads?
You might be surprised, but for radio advertising, you can also expect a conversion rate of 16% (the same as for text message prospecting) according to this survey from 2014 (a bit outdated, though).
Calculating the Costs:
For this calculation, we would also need to factor in the production costs of a radio ad.
On Fiverr, you can get radio ad production service on a budget of about $75 for 30, 60, or 90-second ads.
So we can assume a $75 cost here.
To reach 1,000 listeners, you can expect to pay about $20.
To convert one lead, you need to reach 6.25 listeners (1 divided by a 16% conversion rate).
If 1,000 listeners cost $20, then 6.26 listeners cost $0.12.
So the cost per acquisition or lead for a sales appointment would be $0.12 plus the $75 production cost, which is $75.12.
Of course, the more leads you generate, the lower the cost per acquisition since the production cost is fixed.
Remember that radio stations don’t sell just a radio ad for $20 to reach 1,000 listeners.
They usually sell packages that cost fixed prices from $500 to $8,000 (e.g., New York City). (source)
The cost per sale would thus be $278.20 (still cheaper than cold calling).
Push Notification Ads
You might have already received them too on your smartphone.
They look like regular SMS text messages or alerts when you receive them.
So push notifications are messages that pop up on your mobile device and can be sent by advertisers at any time.
As an advertiser, you can do many things with them, such as getting users to take action, sending a coupon code, letting them know about an event and more.
Here is a short list of push notification advertising platforms:
What about the lead conversion rate for push notification ads?
With broadly sent push notifications, we can assume a conversion rate of 15% for appointments.
Highly segmented push notification campaigns can even reach a conversion rate of 54%. (source)
But I would stay with the lower end (15%) because a conversion can mean many things in the context of push notifications.
It could be installing an app, playing a game, or making an in-app purchase.
Calculating the Costs:
The costs of push notification ads start at $0.1 per click. (source)
To convert one lead, you would need to buy roughly seven clicks.
This would mean a cost per acquisition or lead of just $0.7.
Applying the 27% sales closing rate, we would talk about a meager cost per sale of $2.59.
I have reservations that this data would be valid for the real estate industry since it comes from other industries with lower item costs.
Email Advertising
Email advertising is a permission-based marketing method.
Because of different existing regulations, recipients must consent to receive promotional messages from a brand or business.
This is usually done by giving potential recipients the option to opt in.
In my article about email marketing software, I discussed different email marketing statistics and how to find the best provider.
What about the lead conversion rate for email advertising?
You can expect a 1.4% conversion rate for newsletters in the real estate industry. (source)
Calculating the Costs:
To calculate the costs per lead for email advertising, we first need the average open rate for email, which is 3% (source).
If we take the average of all the mentioned paid traffic methods, which is $1.17 per click with Google Search ads (real estate), $0.82 per click with social ads (real estate), $0.02 per listener with Radio ads, and $0.1 per click with push notification ads, we get an average cost per website visitor of $0.52
You would need 33 website visitors (1 divided by 3%) to generate one subscriber.
If the traffic costs $0.52 on average, one subscriber would cost $17.31.
Since the mentioned email advertising conversion rate is 1.4%, you need 71.4 subscribers to convert one subscriber to a qualified lead for an appointment.
The cost per acquisition or qualified lead would thus be $1,236 (71.4 x $17.31).
This number seems pretty high to me.
But it also shows how essential it is to get the costs per click down with good ad copy, having an overall highly optimized PPC campaign over time, a well-optimized email marketing campaign with a good real estate lead magnet, and a lead nurturing campaign with several touchpoints.
Remember that this is calculated based on averages and paid traffic methods.
The idea of a newsletter is not to send emails just once but in a good lead nurturing campaign regularly over a long period.
To get closer to the truth, we would need to divide this cost by the maximum number of times you could nurture one email subscriber until she or he opts out of your list.
Let’s use the maximum number of touchpoints I analyzed in this article about follow-ups, which is eight.
This would mean that the cost per acquisition would be $154.50 ($1,236 divided by 8), and the cost per sale with the applied 27% sales closing rate is $572.22.
PPC Advertising (Display, Search, and Social)
I have already mentioned PPC Advertising in various articles, such as this article about Facebook ads and this one about Google Search Ads.
Pay-per-click advertising is a type of internet marketing where you, as an advertiser
pay a certain fee each time your ad is clicked.
You basically buy your traffic to your website.
On Google, the focus is rather on bidding for different keywords for which your ad will be displayed.
On Facebook, it’s mainly a pre-defined audience that gets your ad shown.
And there is just recently also Waze Ads (read my article on it here) you can use in real estate that, like Facebook, belongs to the category of social PPC advertising.
What about the lead conversion rate for PPC advertising?
On Google Search Ads, you can expect an average conversion rate of 2.88% (source), on Facebook Ads, an average conversion rate of 10.68% (source) regarding the real estate industry; and on Waze, a lead conversion rate of also 3.9%.
Calculating the Costs:
According to this source, the average cost per acquisition or cost per lead in real estate via Google Ads is $66.02, and for Facebook Ads, it’s $77.48.
The cost per lead (or acquisition) on Waze I calculated separately in the article mentioned above, is still an unbelievable $2.70 (I go back regularly to that calculation because I think there must be a mistake).
This results in costs per sale of $244.51 (Google Search Ads), $286.96 (Facebook Ads), and, theoretically, $10 (Waze Ads), applying the 27% sales closing rate.
I am super skeptical about the lead quality you can get with Waze Ads, which leads me to doubt that we can apply the same 27% average sales closing rate I mentioned in this article.
Native Ads
Native ads are similar to Google’s display ads.
Still, the difference is that they are a form of advertising that adapts to the website’s design, function, and structure or platform they are displayed.
From there comes the name “native” because they are displayed to respect the rest of the content appearing on a website.
You may also want to read my two in-depth articles on native ads for real estate here and here.
What about the lead conversion rate for appointments of native ads?
You can expect a conversion rate between 0.3% and 22%, so 11.15% on average. But since we are talking about properties being high-ticket items, let’s use the conservative number of 0.3%.
Calculating the Costs:
Native Ads’ costs per click range between $0.01 and $0.03 per click, so, on average, we are talking about $0.02 per click.
Let’s assume the worst case with an untested and non-optimized campaign. Thus, a conversion rate of 0.3% and a higher cost per click of $0.03 for the real estate industry.
With this conversion rate, you would need 333 clicks to convert one visitor into a lead.
The cost per lead would then be $9.99.
Applying the 27% sales closing rate would result in costs per sale of $27.
Take this with a grain of salt since it hasn’t been common so far to advertise real estate via native ads.
Due to the high competition in this industry, click costs are likely much higher.
All Real Estate Prospecting Conversion Rates at a Glance
In the table below, you will find all the mentioned real estate prospecting conversion rates at a glance.
I also complemented them with two additional metrics: the cost per acquisition (cost per lead) and the cost per sale.
Why?
Because the conversion rate alone is an excellent way to evaluate a marketing method at first glance, but not the best regarding cost.
For this estimation, I used the average costs for each prospecting method.
Remember that cost per acquisition or cost per lead doesn’t tell you anything about the quality of leads you might get, and the cost per sale assumes the average sales closing rate of 27%.
So even if a low CPA might seem very appealing at first glance, it’s also not the perfect metric but still better than the conversion rate to compare the different methods.
| Real Estate Prospecting Method | Conversion Rates for Sales Appointments | CPA/ Costs per Lead | Costs per Sale |
|---|---|---|---|
| Cold Calling | 2% | $86.40 | $319.68 |
| Calling Expired Listings | 1-3% | $86.40 | $319.68 |
| Circle Prospecting | 1-3% | $86.40 | $319.68 |
| Calling FSBOs | 1-3% | $86.40 | $319.68 |
| Real Estate Direct Mailing | 6.6% | $24.46 | $244.60 |
| Text Message Prospecting | 16% | $21.60 | $80 |
| Radio Ads | 16% | $75.12 | $278.20 |
| Push Notification Ads | 15% | $0.7 (with reservation) | $2.95 (with reservation) |
| Email Advertising | 1.4% | $154.50 | $572.22 |
| PPC Advertising Google Search Ads | 3.9% | $66.02 | $244.51 |
| Waze Ads | 3.9% | $2.70 | $10 (with reservation) |
| PPC Advertising Facebook Ads | 10.68% | $77.84 | $286.96 |
| Native Ads | 0.3-22% | $9.99 (with reservation) | $27 (with reservation) |
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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