So, about selling leads?

Question

I'm interest in getting into the lead selling/bird dogging game.  It looks to me like most investors want to pay .75-1% if the deal closes.  Are upfront fees for leads unheard of?

I'd much rather take a smaller fee, upfront per lead than wait (and trust) for payment.  Besides that it looks to me that if my fee is contingent on a sale then I need a Realtor's license.

Rachel H. · Answer

If you're looking for others, it's best to work backwards. Build your list of buyers and figure out their buying criteria (i.e. real estate type, preferred areas, etc) so you know what to look for. Hope that helps!

Rob Gillespie · Answer

William, getting the deal is the hard part, selling it for a good buck is easy! You will want to find the deal, put a contract on it and sell the contract for real money! I am simplifying things a bit, but if you want some more detail, feel free to [ask]I just do not wanna type a  novel! LOL!

William Green · Answer

I'm turned off by the idea of wholesaling for a couple of reasons.  The first being the generally low opinion of wholesalers that other real estate professionals seem to have.  I get it, the get rich quick gurus have given the field a bad name.

The second reason is simply a skill set and preference issue.  I'm good at marketing, I don't really like haggling. I've got no desire to do the negotiations with a home buyer.  I'd much rather build a network of buyers and pass along leads to others to do with as they will.

Yes, I'll make less per lead or deal, but if I can build a strong network of buyers in five to ten cities (no small feat, but no harder than building up my current client list was) Then I'm building a nice income stream in line with my skills and not venturing into areas I don't want to touch.

I'm a marketing guy. I like it. I'm good at it.  I'd like to expand my portfolio, as a marketer, to include real estate.  I'm not entirely sure I'm interested in becoming a real estate investor.

William Green · Answer

When I say lead I mean

-Name Address, Phone Number and address of property if different
-Confirmed in brief phone interview that they are interested in selling the property quickly.
-Understand that in order to sell quickly they will receive less than market value for property
-The number they stated they would accept for the house.
-What they owe on the house.
-Owner reported problems.
-Brief reason they want to sell.
-In my opinion aren't tire kickers
-Don't have a Realtor
-Aren't on MLS or otherwise listed for sale.
-Unique to lead buyer (lead only sold to one person)
-In a neighborhood/area indicated by buyer as desirable.

I'm fairly good at lead gen, and I think I could accomplish that, but I have absolutely no desire to be a "wholesaler" for a number of reasons.  I'm also not particularly interested in floating the lead gen costs until the house closes, or risking that I won't be paid.

Lets go back to your situation where I sift through 100 prospects and come up with 10 leads I feel are worth passing on.

Standard practice seems to be I hand those over and take $1,500 if you manage to close the property.  That doesn't sit well with me.  That's me floating all of your marketing expenses and hoping to get paid back.  It seems to me like I'm the only one with skin in that game and the payday doesn't justify the risk.

By upfront payment I mean you pay me something like $150.00 per lead for each of those ten leads.  The check clears, and I email you the spread sheet with the info.  And that's it.

If you can't close one of the ten you need to work on your negotiating tactics, not my problem (or my leads are crap, in which case don't buy from me again).  If you close nine out of ten you are getting a steal. Rock on, we'll be doing business again.

I made up the prices for illustration. Don't get too hung up on them one way or the other.

Ted Amenta · Answer

Last year, I got contacted all the time from companies looking to seel me leads.  So, the market exisits.  At least it did.  I never signed up and have not heard from any such companies yet this year.

Gregory Childs · Answer

It depends how you define "lead."

Let's say I need to buy props in SC and you are willing to do the research, leg work, analysis, etc and out of 100 deals you look at bring me the top 10 to place offers and close. And let's say you do quality work and there are some diamonds in the rough that have great returns. At the start it might be hard to front you a fee for your "work" as I don't have confidence that you will perform.

If you prove yourself a few times I might be willing to advance you a fee for your research duties - maybe 50% now 50% on closing. Who knows. It's all a risk/return calculation.

Call it consulting, research, etc. it is legitimate to pay someone to fullfil a need that you have.

TTFN,
Greg

William Green · Answer

I agree, I'm not touching a regulated field without consulting a lawyer.

I'm also not bothering with a lawyer unless the market exists.  Waste of my time and money to find out if someone could pay up front for leads without knowing if they would pay upfront for leads.

John Hicks · Answer

You need some legal advice from a professional.
You run the risk of operating without a real estate license which is a serious offense. 
Contact the Real Estate Commission and find out the rules before you jump in.