What is the Best Source for Leads in Real Estate?
Last month we released a white paper on generating new real estate business. We interviewed nearly 400 real estate professionals to find out what works and what doesn’t in attracting, converting and closing more real estate business. This week, we’ll take a look at lead generation. Specifically, where the best real estate leads come from. We measured the quality of lead based on what percentage closed. We asked respondents to think through their closed business from 2016 and indicate the source of that business. For this section of our survey, we were less interested in where they spent their marketing budget, and more interested in what produced the best results. We asked them of the following choices, what percentage of closes came from each source:
- Network / Social Sphere / Referrals
- Digital Leads / Website / Online Lead Generation
- Open House
- Walk-In Traffic
- Purchased Leads
Overall, respondents said 34% of 2016 business came from their network, more than walk-in traffic and open houses combined. Here are the results from the group at large:
Where did new real estate business come from in 2016?
We then segmented our respondents in three categories: real estate agents, brokers / owners, and marketers to see if there was a difference among these three stakeholders. Agents seemed to close more business from their network than any other group, saying more than half of total 2016 business came from their social sphere or referrals. The majority of business for real estate agents came from two sources: network and digital lead generation. Other sources, including purchased leads, did not seem as effective in generating revenue for agents.
The group that got the most from purchased leads were the marketers. This group was made up of marketing professionals that worked in the real estate space. Marketers claimed that 16% of 2016 closed business came from purchased leads, twice the number of agents.
Overall, marketers claimed to generate closed business from almost all sources offered. They were the group that had the most equal distribution among answers, claiming that walk-in traffic was nearly as effective as digital traffic in generating revenue. They also found the most value from network leads, yet at a much smaller percentage than the other two groups and the group overall.
Where do real estate marketers say new business came from in 2016?
The last group we looked at was brokers and owners. This group also found that the best performing leads came from an agent’s network. Brokers claimed that 45% of 2016 revenue was generated from this source. The other options performed fairly equally for this group, with digital leads faring slightly better than leads from walk-in traffic, open houses, and leads that were purchased from a third-party.
Where do real estate brokers and owners say 2016 business came from?
In the other category, most respondents specified this as “repeat business” or “referrals from past clients.” With all the technology invested in lead generation, it seems that when it comes to converting leads to sales, the best resource remains word-of-mouth.
In a previous post, we explored marketing spend in real estate and discovered that the #1 marketing investment is in purchasing leads. It’s interesting then, that this source accounts for such a small percentage of closed business.
Real Estate professionals spend the largest portion of their marketing budget on purchasing leads, yet those leads account for a small percentage of closed business.
Perhaps it would be worth investing more marketing budget in staying in contact with past clients and a robust network in a more effective way, since based on these results, that is where most of the revenue is coming from.
Please contact us if you have questions about the underlying data referenced in this article, or would like to have access to that data in the form of custom reports, API or bulk files.