Should I pass off my leads to Real Estate Agents I work with?

Question

I've been getting a ton of leads lately, and sometimes they're from people who wouldn't accept my offer for certain reasons or just owe too much on their mortgage. Should I pass of my leads to Real Estate agents who accompany me with comps and etc? Would it build good report with them or do you feel these leads would be worthless to them?

Tim G. · Answer

What is your cost per lead that contacts you?

Once you figure out this number, you might be a little more inclined to monetize every lead that comes in. They aren't cheap and this is a great way to keep the marketing machines tank full of gas.

Ted Schmidt · Answer

@Curtis Daniels

All leads have value.  It's just a matter of figuring out who the leads are valuable to.  I have build a career out of finding value in leads.

Real estate agents will pay for leads if you can figure how they will make money off the leads.  Here is a formula that I have used in the past to determine what anyone would pay per lead.

Start with the amount of revenue someone will make off a lead if they make a sale.  Let's say the real estate agent stands to earn $2500 from the deal. He only has a 10% chance because he wont get every deal. That gives a 1 in 10 closing ratio - a reasonable expectation.  That makes his cost per deal $250.  Take that and apply a 15% marketing factor.  The marketing factor is the amount of total revenue that a lead buyer is comfortable paying as his marketing expense. That makes the lead worth $37.50 (exclusive).  If you want to make sure the person that you refer gets good service, then offer the lead to more than 1 agent and charge 1/2 price - $18.75 per lead.

Another advantage of selling leads is the compliance issue.  You don't get paid on closed deals, which in most cases requires a license.

Dave Savage · Answer

Non-financeable due to missing roof/bathrooms/kitchens, etc are perfect for investors as we can come in with cash (or Hard Money) and buy the property when a typical home buyer could not get a mortgage on a property like that.

This makes them really good targets for wholesalers

Curtis Daniels · Answer

@Dave Savage - You're not giving credence to my initial post because I did not at all say that I was looking for money. I was only saying that based off my relationships with agents, I was expected to get compensated.

How would a non-financeable be better to wholesale?

Dave Savage · Answer

@Curtis Daniels - I would take a slightly different tact.  I would never explicitly look for money out of a relationship with a real estate agent, it is about building the relationship.

This could help in two ways - 1. you never know when a property is going to come into their office that is non-financeable and you will be the first one they call even before it hits the MLS and can end up wholesaling it for a nice profit, 2. Some day you may want to get into rehabbing and having a good relationship with a few agents could pay off with lower listing fees or flat fees for all of the work you have done together over the years.

It doesn't hurt you as if a deal isn't going to be a deal, find someone who can prosper off of it and it will be paid back over time.

Ted Schmidt · Answer

Curtis , that works sometimes but what I found is that human nature will prevail in the long run or when there is enough money on the table and without a legal obligation to pay you, eventually someone won't pay and when that happens you get a bad taste in your mouth that is hard to get rid of.

Curtis Daniels · Answer

@Ted Schmidt - Honestly I give free leads and expect kick back at closing.

@Onan Dumas- I suppose I'll read the state laws and then make my decision of my compensation.

Onan Dumas · Answer

Check your Real Estate License laws in your state...unless you are a licensed  broker or salesperson, it is illegal in many states for a real estate agent to pay for an referral leads. So unless you are planning on getting your license or already have it, I would stay away from this.

Curtis Daniels · Answer

Good call. I'm definitely expected to get some cash in exchange.

Darrell Shepherd · Answer

If they wont sell to you, tell them their best bet is to list it then, and ask if they want the number to your agent.  I just hand mine off, because my agent does a lot for me and I've known her forever, but it wouldn't be bad to ask for a few hundred bucks if they get a commission off a lead you generated.

Agents are hungry too, in my experieince they dont mind paying for sales any more than we do.

Should I pass off my leads to Real Estate Agents I work with?

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