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The True Cost of Real Estate Lead Generation


Lead generation and the demand for it, while not new, has become more prevalent in today’s market. You can say it’s a product of our times. As a result of the market slow down, some real estate agents are looking for brokers to provide them with leads, and many brokers have responded to this by offering leads. While the number of brokers offering lead generation has increased, the question is, “Are these leads really helping Realtors?”

…the question is, “Are these leads really helping Realtors?”

To better answer this question, let’s divide leads into two main categories, bogus or “here say” lead generation and genuine lead generation. The first usually can not be substantiated and come in the form of; “our company is so well known and respected in the area that by working here you will close an extra X number of transactions” or “our national brand is so well recognized that you will close more deals if you join us.”

These claims are rarely if ever substantiated. Even if there was some element of truth to them, all you have to ask yourself is, “How many of these leads will I actually get and how are they going to pick me out of the hundreds and in some cases thousands of agents of the same brand in the area?” It’s simple enough to say that if the leads cannot be substantiated then you can’t count on them.

So what is real lead generation, what are the best quality leads, and what is the cost associated with them? There are many opinions on the matter but let’s categorize them by this writer’s opinion.

Sign calls

Sign calls are always the best. The prospect is in the neighborhood, likes the exterior, has read the brochure, etc. Although this is the best lead, most reputable brokerages forward these calls to the listing agent, and in many cases the prospective buyer calls the listing agent directly from the sign rider’s phone number. Arguably these are the best leads, but unless it’s your listing you are not likely to get them and it’s not a broker/office “lead generation”


Walk-ins are probably the next best source of leads. “Tire kickers” very rarely walk into a real estate office, and a face to face meeting will always yield the best results.


Volumes can be written about these leads, but for the sake of time, we will split them into two categories, purchased leads and direct contact. There are a number of companies that sell Internet leads. The problem with those leads is that the same lead is often sold to a number of people and in some cases those people resell the leads so by the time you get them they could be stale or someone else already got to them. The best source of Internet leads are the ones where the prospects contact you directly. Your website, if it’s well designed and promoted, will yield some of these leads.

The most important thing to understand is that three top websites for home search inquiries are:, Trulia, and Zillow. With that in mind, your efforts should be directed at taking advantage of those sites.


Advertising is the most expensive lead generator. We all know the purpose of an ad is to generate a call. The key is to then be skillful enough to turn that call into a face to face meeting.


All of these lead generators have a cost associated with them. If the office has walk-ins, that usually means that they are in a superior location with higher rent. As a result, these costs will be passed on to you, often through your commission structure or referral fee.

If the office is generating Internet leads they either have to buy them or pay one of the 3 top websites for listing enhancement ads, etc. Once again, the cost will be passed on to you either on your commission structure or by a way of a referral fee or even through a technology or Internet marketing fee.

The same holds true for advertising. If the office pays for it, it will be passed on to you either through a direct fee, commission structure or referral fee.

“Be wary if someone offers you maximum commission and “free lead generation”. The money has to come from somewhere.

Final Words

The moral of the story is that there is no free lunch. Be wary if someone offers you maximum commission and “free lead generation”. The money has to come from somewhere.

If you need or are looking for lead generation and don’t have the resources to invest in marketing yourself, find an office that has true lead generation, high commission structure, and charges a referral on the leads that they provide you. This way you only pay on actual transactions from those leads and not on a continuing basis whether you close a deal or not.

Lastly when someone claims they have “lead generation”, ask them to show you what type and where are they coming from.

Choosing a new broker is a business decision, do your due diligence.

Agents who read this real estate article also read:

The Email You’re Sending Is Costing You Business
Should I Invest in My Website?
Don’t Make Your Personal Bio About You
Ask the Expert: What Are the Best Negotiating Techniques to Save a Deal?
The 4 Essential YouTube Tips

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art_darmaninArt Darmanin

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