Most real estate teams build their business on the backs of other companies. Specifically, they rely on portals and referral sources to provide their leads. While I recommend signing up for every referral source possible, you must understand that these sources are not sustainable. Because they can switch to a competitor or increase their fees at any time, relying on them alone is a massive risk to your business.
The Hidden Cost of Referral Leads
Let’s run the math on a typical referral lead. If you sell a home with a $15,000 commission and pay a 30% referral fee, that lead cost you $4,500. However, when you build your own real estate lead generation systems, your costs drop dramatically.
For example, if it costs you $20 to generate a lead through Google or social media, and you have a 1% conversion rate, you only spend $2,000 to close a deal. Consequently, you save $2,500 per transaction. Furthermore, you are building an email database that you own forever, rather than just “renting” a lead for a one-time fee.
The Power of the 90,000-Email Database
Over the last 15 years, I focused on driving traffic to my own IDX website with forced registration. As a result, I built a database of 90,000 emails. Surprisingly, my local marketplace only has 50,000 people. This means I have more reach than the actual population of my area.
When you own the database, you own the community’s attention. Therefore, you can use that power for more than just selling homes. Specifically, I have used my list to:
- Support Local Nonprofits: Raising money for emergency training and community events.
- Build Goodwill: Establishing a reputation as a community leader, not just an agent.
- Insulate the Brand: Making it nearly impossible for “haters” or competitors to disparage a company that does so much good.
Building the Safe with the Right Combination
You might already know all the steps to success, but you might be taking them in the wrong order. By implementing real estate lead generation systems early, you change the combination to the safe. In conclusion, do not let portals control your destiny. Instead, drive traffic to your own website, build your own pillars, and protect your profit margins. When you own the data, you own the market.