RISMEDIA, September 15, 2006—The Internet has
influenced a structural shift in most real estate professionals’ marketing mix.
Whether you work for an independent or branded residential agency, it is
becoming increasingly difficult – and painful – to ignore marketing your firm
or yourself on the Web. From personal Web sites to sophisticated search engine
marketing programs, the sourcing of new business and clients is increasingly an
What events are influencing this structural marketing shift?
Fueled by the average American’s
thirst for information and scarcity of time, the Internet is where the action
is today; in real time.
According to Search Engine Marketing, Inc., by Moran &
Hunt (IBM Press 2006), total Web users
surpassed the 300 million mark in 2004, with paid placement advertising
generating nearly $3 billion in 2005 and expected to grow to $5.5 billion by
2009. Naturally, real estate professionals are among those turning to the Web as
a source of new business in the form of lead generation.
Besides this volume of both bodies and dollars orbiting the
Web, consider further that, according to the National Association of Realtors
(NAR), more than 70% of those initiating the sale or purchase of a home begin
doing so online. As of 2006, 72% of all Internet users in the United
States have the use of broadband to access
the Internet, according to Neilsen/NetRatings. That’s 103 million Americans
able to quickly view and download large graphics files such as photos and
virtual tours available in over 930 MLS
databases across the country.
With the maturity of the Internet and the genesis of third
party lead generation Web sites, many agents and brokers are in a quandary as
to which, if any, such vendors they should engage to increase their online
That is not surprising. A
recent Google search of real estate lead generation Web site search yielded 9.3
million results in just .36 seconds. From <link http://www.agentconnect.com www.agentconnect.com> to <link http://www.zillow.com www.zillow.com>, and everything in
between, a vast labyrinth of Web sites and vendors await an agent’s search in cyberspace.
Eager to enroll real estate
agents into their program for a fee with promises of robust, qualified, and exclusive
leads, many of these vendors fall short of agent expectations for a variety of
reasons – not all of which are the vendors’ fault.
So, what is an Internet or e-commerce lead anyway?
Well, let’s consider what a
lead is in the first place. According to the Merriam-Webster Online Dictionary,
a lead or prospect is a potential buyer or customer.
is likely to retain professional assistance from
a real estate agent,
is qualified to consummate a real estate
transaction because the consumer is:
– Will make a purchase or sale decision within 12 months of initial contact
– Either wants to, is compelled to, or must do the transaction
– Has the legal and financial capacity to consummate the transaction.
With regard to the Internet and e-commerce then; what is a
Many agents who enroll in
online referral programs such as <link http://www.HomeGain.com
www.HomeGain.com>, <link http://www.RealEstate.comwww.RealEstate.com>, <link http://www.HouseValues.com www.HouseValues.com>, <link http://www.HomePoint.com www.HomePoint.com>, and others are
under the impression – rightly or wrongly, depending on the vendor’s sales
force – that every referral from such programs is a qualified lead.
This is not necessarily so. Some
programs offer pre-screened, qualified leads, but many do not.
For instance, <link http://www.Lead2Realty.com > prescreens
subscribers’ leads, and charges between $30 and $70 per lead, depending upon
whether the lead is a buyer, seller, or combined buyer and seller. More often,
such referral programs generate potential leads in the form of contacts. A
contact exists when a search engine such as Google, Yahoo!, AOL,
and MSN is queried by a searcher for real
estate topics such as sell a house in Green Bay,
or Buy a home in Denver.
Through these search engines, a
potential client (the searcher) identifies and visits a Web site included among
the search results to screen properties and consider real estate agents to list
a home for sale or to assist in the purchase of a home. Typically, these Web sites
require the searcher to enter contact information in order to gain access to
the MLS database available through the given
vendor’s site. The operative term here is contact information, not lead
While it may seem a matter of
semantics, the difference between contact and lead information significantly
affects the value of the referral. A contact does not become a lead until some
reliable system or some knowledgeable party qualifies the lead as described
above. This is where many referral program Web sites disappoint their
subscriber agents. They call contacts, leads, which sets an unrealistic or
false expectation for the subscriber agent. So, when the agent subscriber
responds to an e-mail lead referral and follows up with the potential client,
only to be advised by the person that they just wanted to see what homes are
selling for in their neighborhood and are not presently in the market, the
agent subscriber is disappointed and often perceives the referral service as a
poor resource for new lead generation.
Most such Web sites also
generate their fair share of bogus leads that occasionally slip through quality
control screening. Some are both creative and humorous. For example, one
service recently received a home seller request for assistance from a ‘Hugh
Afner’ of Lake Shore Drive
in Chicago. A customer service
representative called the contact’s phone number in Chicago
and was directed to Hugh Hefner’s personal assistant at the Playboy
Mansion in Los
Angeles. Needless to say, Hefner had not inquired
about listing his property for sale on the referral site. Clearly, when such
bogus leads reach an agent, they further diminish the perceived overall value of
all real estate referral program Web sites.
Now, two key agent issues are
presented by the contact versus lead scenario described above. First, how to
overcome the disappointment associated with the lead, not contact, expectation
set by the referral program Web site. Second, the dilemma of what the agent
should do with a given contact. Is this person a waste of an agent’s time, or
is he or she a potentially premature lead in need of nurturing and/or a source
of additional referral business?
Let’s address the lead
expectation issue first. As any savvy real estate agent knows, the sales
industry is a numbers game. They know that their performance is a function of
their arduous farming, direct marketing, networking efforts, and also their
hustle and intelligence. Based on these painstaking and enduring efforts, top
agents consistently outperform their peers because they know they need to
engage X number of client suspects, to convert them to Y client prospects, to
convert them to Z clients, to convert them to revenue-generating transactions.
Given this funnel, it may seem that contacts would be a reasonable starting
point for generating leads. Does it make sense for agents to view all the
people they meet in person as contacts and/or potential leads and clients?
Most agents don’t strongly
believe that everyone they meet or who crosses their path will become a client,
but most good agents treat everyone as though they might become a client. This
is often true whether that person has articulated a real estate need or not. As
such, wouldn’t the “contact” that searched a given Web site’s property database
have expressed a known curiosity about real estate activity in a given
neighborhood? And if that given neighborhood is in a subscriber agent’s primary
trade area, shouldn’t they be entered in that agent’s customer relationship
management (CRM) database so as to be
further engaged by that agent? By so doing, a savvy agent can expand their
contact base by adding a client suspect who has knowingly expressed an interest
in that agent’s trade area. By adding a qualified “suspect” to your CRM
database, you have increased the number of suspects from which future clients
will be drawn.
Bonnie Cox, a 28-year industry
veteran and a broker with RE/MAX Masters in Denver,
Colorado notes the importance of staying in
contact with as large a group of consumers as possible. Her contact system has
helped her close over 80 transactions in the last two years.
Bonnie explains that, “When you
(agent) receive an Internet lead, consider it the beginning of a long-term
relationship … while most buyers appreciate a brief contact during the initial
relationship building period, they will almost certainly want to do much of the
property research on their own.” Following the initial Internet contact and
follow up, Bonnie “immediately enrolls the prospective buyer in her newsletter
and monthly ‘drip’ marketing program.” According to Bonnie, that prospect will
now have two monthly automated contacts in the form of the newsletter and
“drip” e-mail marketing campaign.
Using the Internet to take a longer-term view on prospecting
The Internet is known as a
real-time, get-the-information-fast and make-it-happen-now medium. It clearly
is a mechanism for doing so. However, according to an independent study by
Hebert Research of Bellevue, Washington (commissioned by <link http://www.HouseValues.com www.HouseValues.com>), sellers take
an average of nine months researching and pondering the issues surrounding the
sale of their home before listing and selling their property. Sellers conduct pre-research
for 5.5 months, active research for 1.4 months, and take 2.4 months actually
selling the home. Conversely, the study says that buyers take nearly 17 months
from the time they first contemplate purchasing a home before actually
consummating the purchase. Buyers conduct pre-research for 7.1 months, active
research for 5.5 months, and spend 4.1 months actually finding, negotiating,
and closing the purchase.
In traditional real estate
prospecting, agents tend to focus on listing and buyer representation prospects
during the selling and buying phases identified in the Hebert Research report,
that is, the three-month period for sellers, and the four-month period for
buyers. Agents tend to focus on these two areas because: 1) as commission-only
salespeople, agents must focus on the short term, and 2) prior to the Internet,
it was very difficult to identify prospects in the pre and active stages of
real estate research. While the Internet hasn’t done much to change the agent’s
compensation plan, it has significantly increased the likelihood that an agent
can both identify and engage a potential prospect in the pre and active
research stage. But this is where technology and historic industry culture tend
So, how can agents change their
short-term focus to engage more prospects earlier in the sales cycle? The
answer is to embrace change intelligently, and to reduce the pain associated
with such change.
Agent focus in a new market
Agents need to ask the right
questions of agent referral network providers, recognizing the value of a good
contact, and converting good contacts to leads at the appropriate time. For
example, ask a referral network sales representative the following: Who is
considered a lead – anyone entering data in your system’s Web site while
viewing properties? Or, are leads those who request more detailed property
information or agent assistance? Are a given referral network providers’
contacts pre-qualified? If so, what does that process entail? What questions
are asked of their Web site visitor?
Besides qualifying the contacts
provided, agents should probe further to understand how the contacts are
distributed to the referral providers’ subscribers. Are leads distributed
simultaneously to multiple agent subscribers, who then compete for the given
contact’s business? Are they considered exclusive to one agent subscriber per
geographic territory, such as a ZIP code? If so, is there a time-sensitive
component to the exclusivity?
Many referral network providers
recognize that Internet searchers are impatient; studies show they must be
contacted quickly to be converted to a qualified lead. This is true even if the
contact is engaged early in the sales cycle as described above. In 2005, more
than 70% of consumers utilized the Internet before making a real estate
decision, and half of those concluded business with the first agent with whom they
made contact, according to the National Association of Realtors. As such, many
contacts are exclusive for specific periods of time, and will be sent to
another agent subscriber if the first agent subscriber does not respond within
a given timeframe.
In closing, the Internet and real
estate referral network providers are now an established and recognized source
of new business in residential real estate. Now, it is up to agents to convert
contacts to leads, leads to clients, and clients to revenue-generating
transactions. One possible first step is for agents to subscribe to quality
e-commerce real estate referral programs, and manage their lead expectations.
Kyle Cascioli is an Adjunct Professor of Real Estate in the
Burns School of Real Estate, part of the Daniels College of Business at the University
of Denver. He is also Manager of
Real Estate Services at HomePoint.com (<link http://www.homepoint.com www.homepoint.com>), a consumer-centric
real estate Web site that provides vendor, marketing, and agent-referral
services in selected markets across the United States.
Cascioli is also the broker-owner of Barrett Associates,
Inc., a member of the National Association of Realtors, the Colorado
Association of Realtors, and the Aurora Board of Realtors.