Being a real estate agent is highly competitive and most end up calling it quits within 5 years. The profession is saturated with over 2 million agents nationwide. With so many agents competing for buyer/ seller’s attention, effective marketing is the key to making it or breaking it. Over the last 2 decades there has been a shift in the way people buy/ sell homes. People now generally start on the internet. 3-5% conversion rate is considered good, which means that if you have 20 leads, maybe 1 will convert, if you are good. Lead generation is tricky due to the highly competitive nature of the industry. Let’s discuss some of the more common ways that realtors find leads.
Zillow
Zillow has become the leading online platform in real estate for sellers, buyers and agents. They have the largest database of homes with over 110 million properties and offer pre-qualified financing, informational material and Zillow Offers (iBuying). Creating a profile and listing homes is free, and you definitely need to have at least a free profile on Zillow.
As great as this sounds, there are a few downsides to relying on Zillow for lead generation. Being the biggest online platform for real estate, there is an immense amount of competition. Zillow also offers preference to agents who are part of their Premier Agent or Flex programs. Premier Agents pay Zillow for a share of advertising space in specific zip codes. The pricing for this exposure depends on 2 variables: the average price for a home in the zip code you have chosen and how many other agents are paying for the same zip code.
Quality markets are not cheap, you can expect to pay quite a lot per lead. According to research done by The Close, you can expect to pay anywhere from $150/Mo to $1000/Mo for 5 leads. With a conversion rate of 5%, this puts you at 1 conversion per 20 leads. If we were to shoot for somewhere in the middle of monthly pricing for 5 leads, let’s say $500/Mo, it would cost you $2000 to get 1 conversion. The return on investment here is still pretty good, but this is for agents who have very high conversion rates.
According to the National Association of Realtors, typical conversion rates are much lower, being 0.4% to 1.2%. If you have a conversion rate of 1%, then you would need 100 leads to get 1 conversion. At the same $500/Mo that we used earlier; this would put your advertising costs at $10,000 to get one sale. This ROI is much worse, and depending on how much the selling price is, it might actually cost you money. This isn’t even considering the time invested to make a sale.
Zillow’s FLEX program works a bit differently (it’s also limited to only a few markets). There are no upfront costs to get leads, however, there is a back-end cost. Once a transaction is complete, Zillow will charge a “success fee.” Although this amount is undisclosed to consumers, this fee is estimated to be 30-40% of the agent’s commission. With taxes on top of that, you would be giving away half (probably more) of your earnings.
A good seller lead generator is very difficult to find and Zillow generally is not a go to source for seller leads. However, with their Zillow Offers (iBuying) feature, those that request offers and do not sell are quality leads, so then it comes down to if you can get them.
There are lots of agents on Zillow and multiple will be shown per listing whether they listed the property or not.
While Zillow has a lot of pitfalls when it comes to advertising, you would be doing yourself a disservice by not taking advantage of the site’s free features. Zillow advertising may be worth the investment, just make sure you do your research and calculations before dropping a lot of cash. Whether or not advertising on Zillow makes sense depends on your market, your conversion rate, and competition from other agents.
Realtor.com
Realtor.com began as a closed network for members of the National Association of Realtors, but has been open to the public as a listing service since 1996. The site gets tens of millions of unique monthly visitors, making it a powerful contender in the online real estate industry. Much like Zillow, this site has a lot of competition from other agents.
Agents will pay for a share of zip codes that they are interested in working. When Realtor.com gets leads they will send them to multiple agents that have paid for these zip codes. This has a couple consequences; first, when getting a lead, you need to contact them as quickly as possible in order to beat other agents to be the first contact and second, leads will be contacted by multiple agents in a short amount of time, potentially irritating them. To get around this problem you can pay for exclusivity. Most quality markets are already taken and in order to gain exclusivity it will cost you quite a lot, expect $1000+/Mo.
Another thing to take note of is that Realtor.com works with 12-month contracts. This is quite the commitment. The number and quality of leads is generally less than Zillow can offer as well. The site is definitely based more on buyer leads than seller leads, though it does seem that they are trying build their seller leads generation, having a program for seller leads and recently partnering with Opendoor. iBuying is interesting in that it is both competition for seller leads as well as a lead generator, and seeing as this is a partnership and not a feature directly from Realtor.com, it’s probably not an effective seller leads generator. As far as advertising on Realtor.com, it makes the most sense to buy exclusivity in the zips you want to work, if you can afford it.
Social Media
Having a presence on social media is essential for all businesses, real estate included. Whether or not you choose to advertise on these platforms is up to you, however, trying to build an organic presence is good for a couple reasons; building your reach and building your image. Buyers and sellers will often check your social media before working with you, make sure there is content there so they know you are active and you want to present yourself as a professional.
Facebook is currently the most popular platform for real estate agents, but I expect this will change in the coming years. Facebook generally has an older demographic and as younger generations begin to age into their homebuying years, we will probably see a shift into a different platform, I suspect Instagram, as we’ve already seen this shift happening, but it’s hard to say. This is also not to say that Facebook will become obsolete.
A few things to consider when building a presence on Facebook:
- Organic reach for business profiles is really low (about 5%)
- As opposed to Zillow and Realtor.com, people don’t generally go to Facebook (or any social media platform really) in order to look for real estate services, meaning it will be harder to get quality leads
- Facebook has put restrictions on ads related to housing, eliminating the ability to target based on demographics, behavior or zip code.
Being owned by Facebook, Instagram shares a few of its problems. One thing about Instagram is that because of the limited text and visual nature of the platform, it can be easier to build an organic following. Regularly posting high-quality content as well as using solid hashtag strategies will help.
Social media can be utilized effectively in order to build your online presence and present yourself as a professional. As far as a lead generator, because of restrictions in targeting, it is less effective for real estate than other industries. It is relatively less expensive to advertise on these platforms though, so it might be worth throwing a few bucks in there. Using these platforms as a way to validate your skills and professionalism to potential leads might be a more effective use of these platforms, meaning you might want to focus your attention on the organic side.
PPC
The first place lots of people go to when thinking of buying or selling their home is a search engine, generally Google. This means that you need a website, and it’s amazing how many real estate agents don’t have one. Investing in a quality website will put you above a lot of the agents out there. However, simply having a website is not enough, you need to put effort into getting your website seen. It will be extremely challenging to rank above Zillow, Trulia, Realtor.com, etc. in the organic results. Though you should still work on Search Engine Optimization (SEO) by creating quality content, making your website secure and having a good user experience, investing in Pay-Per-Click (PPC) is a faster and easier way to get your website to be more visible.
As the name suggests, you pay when people click on your ad. Cost per click (CPC) depends on traffic, demand and competition for the keywords you want your ads to show for, and because CPCs are determined by how much other agents are willing to spend, generally CPCs will level out at competitive, yet profitable amounts. You set the budget, so you can spend as much or as little as you want, just be aware that the more you spend the more visibility you have.
PPC search advertising is based on keywords and because of this it can be highly targeted to intent. Investing in keywords that show intent is a good way to encourage quality leads. This way you can focus on buyer and seller leads. You can also target geographically, so you can choose to focus nationally (or internationally) to capture leads of people intending to move to one of your markets (buyer leads), or you can focus on the specific locations that you intend to work.
The ads that show in search queries are based on auctions. There is a bid threshold, and if your bid is below it, then your ad will not show. There is also a maximum of 7 positions for ads. This means that your bidding strategies and site quality need to be on point in order to show up on the front page. This can take a while to dial in, especially without going over budget.
PPC ads are a great way to gain visibility. Unlike Zillow or Realtor.com, you won’t face competition from other agents once people get to your site. This gives you exclusivity and more freedom in how you present yourself. The biggest downside is that this can get expensive if not optimized properly.
Direct Placement®
The trademark service from Direct Placement, LLC, Direct Placement® is an excellent way to get your site featured on the front page of the world’s biggest search engines at a flat monthly rate. This service has the benefits of PPC advertising, while removing a couple of the downsides. As with PPC, your website will have increased visibility and focus on targeted keywords that demonstrate intent. Although it’s preferable that you have a website, you don’t need one. You can feature your Realtor.com profile or your Facebook page.
Direct Placement, LLC is a Premier Google Partner and has access to data that promotes proper keyword selection. We won’t place any keywords that do not show a substantial amount of traffic, demand and competition, this way you know you’ll only be placed on quality keywords. The numbers show that most people start their search for real estate online. A lot of these start on search engine queries. Getting on the front page can give you a huge advantage over the competition, especially if your ads are positioned among or above the listing sites like Zillow and Realtor.com. Having front page placement on keywords that show intent can produce quality leads, and, through proper keywords selection, you can target either buyers or sellers.
One of the biggest strengths of this program is that it is billed at a flat monthly rate. You won’t be surprised by any additional fees for clicks or conversions at the end of the month. This will make budgeting simpler, as you know exactly how much you are investing. There is a one-time account creation fee of $79.95 to create your account with the search engine and establishes your Direct Placement account. From there keywords start at $75/Mo and scale depending on the amount of traffic you can expect to receive. This is a much more inexpensive option than listing sites and you don’t lose out on targeting the right people, the relevancy is there through data driven keyword selection.
If your placement is not approved or if your ads are not active & eligible within the first seven (7) business days of account creation, we offer a full refund no questions asked. Typically, our clients are online in 24-48 hours! So, your ads will show on the front page in a very short amount of time and the placement is risk-free thereafter. This means that you only pay when your ads are active and eligible, and if for whatever reason they are not, you will receive a down-time credit.
You will be working with Google Certified individuals who are experts at what they do and we believe that the results will speak for themselves. Because of this we don’t think it’s necessary to rope you into a long-term contract like other services do. This service is month-month and you can stop at anytime as long as you let us know 7 business days before the account recurring date.
If you want targeted advertising that can reach the people who are looking for a real estate agent at a fraction of the price of listing sites, Direct Placement® is for you. No long-term commitments like Realtor.com, no back end fees like Zillow FLEX, more targeted and intent driven than social media, and more consistent than PPC in terms of placement and monthly investment. It’s an opportunity that can transform your business one click at a time.
Conclusion
Real estate is one of the most competitive industries out there, leading to a high failure rate among agents. Aside from being good at what you do, you will need effective marketing to set yourself apart from the pack. Using all of the free platforms you can, like a Zillow profile and social media, is important. It’s also important to wisely invest your money in places that will give you the highest returns. As we’ve seen with listing sites, advertising here can produce leads that have high intent to buy or sell, however, the fees can quickly get out of control, and can even end up leaving you with a negative ROI. Social media, specifically Facebook and Instagram, have restrictions on advertising when it comes to housing. This makes it less effective in real estate than these platforms are for other industries. PPC is a great option as far as targeting and intent, it can be tricky to optimize to get front page placement and determining how much you will actually end up investing. Direct Placement® is a solid choice for real estate agents looking for great positioning on the search engines with highly targeted and intent driven keywords at a flat monthly rate.
Direct Placement, LLC is a digital marketing agency that offers a variety of digital ads and services. Our trained and certified team of Account Managers and Internet Marketing Advertisers is dedicated to helping your business achieve its advertising goals. They will work diligently with you to help ensure our advertising efforts are tailored to your specific needs. Contact Direct Placement, LLC today or visit our website to discover how we can start transforming your business one click at a time! You can also follow us on Facebook, Twitter, or Blogger for more online marketing related content.
Direct Placement makes digital marketing easy. Your Marketing Pro is a Google Premier Partner and ready to boost your ad to the top of search results. Get started now.