We get this questions a lot from investors buying leads for the first time. It is an understandable questions since a lot the cost of exclusive leads can accumulate quickly and investors want to spend their marketing budgets on activities that will make the best returns.
We’ve tried to determine the number of motivated real estate seller leads it takes for an average investor to close 1 deal and found out that the success rate of our lead buyers varies so much, it is impossible to quantify.
There is no easy way to calculate lead to deal ratio
Our most experienced investors are able to close about 1 in every 3 leads. While brand new investors usually can’t close deals at all regardless of how much equity the lead has. The difference between the seasoned investors and the ones that are just starting is how they approach a lead:
1. Successful investors call the leads right away. New investors wait hours, or even days before they get in touch with the home seller. By the time they contact the seller, they are usually already working with another investor. Experience investors know how to nurture their prospects and build rapport; they listen to them and show compassion for their situation. Some of our top producers even invite sellers out to lunch if the deal seems feasible. At the end of the day, sellers prefer to sell to someone who they feel comfortable with.
2. Successful investors have patience. They also have a reliable system for following up with their leads until they are able to close the deal. A home seller might have very high expectations of what his house is worth, and might need to experience some frustration before they finally agree to your offer. New investors usually abandon the lead as soon as they say “No”. Successful investors interpret a “No” as “Not Now”. They make sure the seller gets reminded that his offer stands for when he decided to sell.
3. Successful investors invest in their marketing. If spending $500 on your marketing seems like too much, its going to be hard to get a consistent flow of quality leads. While you can spend your time looking for deals on Craigslist, you should know that most other beginner investors are there too. Experienced investors don’t put up their own yard signs, don’t build their own website and don’t mail their own pieces. They hire people to do this work while they focus on what they are best at, closing the deals.
So how many leads does it take to close a deal? A better question would be, “how many leads does it take “me” to close 1 deal.” It all depends on your approach.
New investors usually give up after receiving their first lead. They expect a deal served in a silver platter. If you are serious about your real estate business, you will value each lead you buy. You will contact the seller, educate him and present him with an offer he might refuse… at first. The leads we bring you need to be contacted, nurtured, and they will generate amazing profits for your business.