Purchasing seller leads

10 Replies

What luck? With which provider(s)? Cost?

I've been purchasing buyer leads for 3 years w/ good success, great ROI. Now thinking about doing same for seller leads. Got a call from Market Leader which strikes me as a bit pricey (one high end local zip code quoted @ $52/lead/mo., they'll guarantee 11/mo. for a total of $621/mo. including a required fee for CRM). 6-month minimum means a fairly significant cost for what amounts to an experiment.

Hoping to shed some light with your help on the likelihood of success with this source. Thanks for any replies!

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@Jeff Weissman

I have tried various methods to get Internet seller leads since 2008 with no success with landing pages. The one thing I found that works is email and telemarketing to old Internet foreclosure leads. These people have already tried to save their house. The ones who are successful often go back into default within a year.

Very few sellers seek out websites to sell their home to investors or to find a short sale agent. There is nothing in the deal for them so they don't go looking for it the way a home buyer does.

The one method that was effective was a website that sellers could use to list their property themselves, for free. I had a site like this in 2001 but when I lost the developer, the site died because of lack of support and revenue model.

I have had great success from this when working in South Florida market but was able to "try before i buy" with a shorter initial contract. I would say that if they believe the quality of their leads justifies this price they will give you a trial on them to show you this and then i am sure with success you would go in for longer contract.

With some arm twisting no doubt you will get a test/taster period.

Good luck

Hi Jeff,

Great question. I'm interested in this topic too as I'm working on fine tuning my marketing budget and strategy.

$52 per lead sounds reasonable, assuming the quality is good. This morning I was working on calculating what a lead is worth to me. The math may be a little different if you are buying leads as an agent vs. as an investor. But, here is what I came up with. I'd be interested in your feedback and anyone else's feedback on my math.

1. Value of a successful transaction ($5K): For my case this is a good deal that I can either fix/flip or wholesale. I estimated the value at $5K as that is a typical, conservative wholesale profit. Obviously, fix/flip profit is substantially higher, but also more work, capital, equity partner, risk, etc. In your case, a transaction is probably worth 2x-3x that to you in commissions.

2. Conversion ratio - How many leads equal 1 deal? I estimated 25 leads to close one great deal. This can vary wildly depending on quality of lead and sales process. But I feel 25 is relatively conservative. For you, 25 may be a bit high for listing leads, if the quality of leads are good.

$5,000 / 25 = $200 per lead in total profit / value to me.

At $52 per lead, that would be around 26% of the profit towards my marketing budget. That is in line with what many businesses put towards marketing.

I'd want to know the quality of the lead. Have you seen the website that these leads are coming from? I'd look at how much qualification is going on before they enter their information. For example, is the website simply promoting a free home valuation? Or are the leads more qualified, like expired listings or unsuccessful FSBOs?

Keep us posted, I'd love to hear how this works out for you.

I'm always looking for great deals in the East Bay. My last two flips were in Oakland and Castro Valley. Keep me in mind if you come across a fixer that needs some TLC. If I buy a deal you bring, you'll get commissions on the buy and sell side as I'll list it with you when selling too.

Good luck and happy hunting!

Peter

@Peter K. Thank you for your analysis. Let me ponder this a bit.

With regard to flips in the Oakland area, sure will keep you in mind, but frankly I have about 3x the number of interested investors as properties & I give first priority to my best clients, naturally--the ones with whom I have a strong, longstanding relationship & who've demonstrated responsiveness, aggressiveness in offer pricing, ability to close, & high quality rehabs so my work on listing the flip is gratifying and successful for us both.

Perhaps you could give me a few details on the type of fixer deal you look for, price range, condition limitations, etc. Do you have a crew, work with a particular contractor, or cobble it together after close?

Again, thx for picking up on my post!