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Lead Generation- A Disturbing Trend

July 8, 2010

Submitted by Connect Realty co-founder Jim Canion

One of the most important parts of any agent’s business is finding new clients. The nature of our industry is that new clients must be sought and developed into long-term relationships.

With the rise in popularity of online search and  the openness of information, more relationships are formed over the Internet. Many agents have been able to build and optimize a site that draws many buyers looking for information about an area as well as specific homes. In fact, Connect Realty is working to develop local sites for its agents in many areas around the country. Lead generation is high on our priority list along with several other areas of technology improvement.

Historically, most clients have been developed by personal contacts. A number of very large and successful consulting businesses (ex. Buffini System) have been built around cultivating and developing our sphere of influence to achieve more leads. But the issues with lead generation in today’s industry are apparent:

  • An ever increasing number of companies have started with the sole purpose of selling leads to local agents
  • The fees for such leads range from fixed monthly charges to per lead charges to a large percentage (usually 30%) paid at closing (most 30% firms even have a rebate program that rebates several hundred dollars right up front)
  • As more people are attracted to agents in this manner, a larger portion of the traditional commission is funneled to the lead generator and away from the person providing the service: the agent

The problem is that these firms  pose as actual real estate brokers and the person responding to an optimized site or a promotional email is mislead. These firms are in no way brokers and have no ability to evaluate the agents they refer. In fact, the agent who ends up with a lead is many times not the best person to handle the needs of the client. Many times they do not even work in the same area.

The service they give is compromised from the start.
This is becoming a big issue and needs to be addressed by the industry.

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