Did you know that the average lead conversion rates of real estate websites are actually pretty bad?
For a few months now, I’ve been trying to find a likely reason for this.
But how bad is the lead conversion rate on real estate websites?
According to this source, it’s 0.6% on average.
Is it that bad?
Well, when you compare it to the average website conversion rate across all industries, it is.
Across all industries, it’s 3.68%, according to a statistic from this source.
So in real estate, it’s six times less.
Why is that?
To find out why, I conducted a small study to analyze the websites of the one hundred largest real estate brokerages in the U.S.
I looked at their methods for generating seller leads.
My goal was to identify a pattern and, hopefully, uncover a reason for these low conversion rates.
I used the data from the website Realtrends and went through it one by one.
Do you think I found a pattern?
You bet.
But before we dive into my little study, what do you think I analyzed on these real estate websites?
I will give you a hint.
It’s what persuades visitors to leave their contact information on a website.
It refers to an incentive, also known as a freebie, giveaway, lead magnet, or what some might call an ethical bribe.”
Offering something for free in exchange for an email address and a name usually does much better than just having a contact form or offering something extra-ordinary, such as…a newsletter.
Getting on a newsletter without anything in exchange was a thing when you got a dopamine hit when you received a new email in 2001, but now, not so much.
And since in the current market, it’s still more difficult to generate seller leads than buyer leads, I focused on the seller lead generation part of these websites.
The Results of My Small Study
Of the hundred analyzed websites, almost half (49%) offer exactly zero, nada in terms of incentives to generate seller leads.
There are only contact forms for potential sellers who may be interested in selling.
That’s it.
Then almost again, half (47%) offer the famous free home valuation as an incentive.
And only a tiny percentage offer a different type of incentive.
What are these different types of incentives?
Well, 2% offer an instant cash offer seller lead magnet (these brokerages may also work as wholesalers), and another 2% offer a tool-based lead magnet called Move Meter.
The move meter can help potential sellers and buyers compare two different locations so they can find out whether it makes sense to move or sell and then move.
But often, these incentives were offered together with the standard home valuation lead magnet.
So they offer two lead magnets simultaneously.
Now, have you already a hunch why the real estate website conversion rates are so below average?
The Likely Reason for Below-Average Real Estate Website Conversion Rates
Let’s get into the first most obvious reason.
I think if just half of the brokerage websites would start using a lead magnet instead of just a contact form for sellers, this average could already be doubled.
So the first reason is not using a seller lead magnet at all.
The not-so-obvious reason has more to do with marketing strategy and psychology.
Let’s say you decide to start going to the gym (you can still tackle these New Year’s resolutions).
Now, in your city or area where you live, for some weird reason, it is common practice that people have protein shake stands (like lemonade stands).
They give away free protein shakes.
Now you go shopping for a gym membership.
You go to the first gym, and when you leave your contact information and consider a membership with them, you get free protein shakes in exchange.
Sounds okay, but well, you can get a free one already at the next street corner.
So you go to the next gym and see what they have to offer, and what a surprise! They also offer free protein shakes in exchange for your contact information.
You do this with two more gyms, and each one offers the same.
In the end, you don’t know anymore which gym you would prefer over the others.
All of them sound somewhat the same.
And that’s exactly what happens when almost everybody offers the same lead magnet.
On top of that, you can get free home valuations from other platforms like Zillow, Eppraisal, and Chase’s home value estimator.
This leads to potential sellers perceiving it as less valuable.
And when website visitors, such as potential sellers, find the same lead-generating method repeated across different real estate websites, they become desensitized.
It’s like the famous banner blindness or ad blindness.
Your website visitors don’t even see this free offer anymore. Their brains shut it out.
So this is the second, less obvious reason why I think real estate website conversion rates are below average.
And this is not a good thing when you operate in a highly competitive market like real estate.
So instead of a differentiated value proposition, the free home valuation becomes a basic expectation from potential sellers and buyers.
What can you do instead?
Well, this also depends on the degree of freedom you have with your real estate brokerage’s website.
Many of the websites I analyzed are from well-known large brokerages.
As an agent for these brokerages, you usually get to use their website framework.
But suppose you have greater flexibility.
Given that a home valuation tool has become a standard feature on real estate websites, I would suggest keeping it but not requiring contact information in exchange.
Instead, I would recommend offering a unique seller lead magnet that will help you stand out.
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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