How much to spend on online real estate leads every month is the most commonly asked question from anyone about to embark on a Google Ads campaign or a series of campaigns.
While there are several factors to consider like cost per conversion (CPC) and cost per lead (CPL), the short answer is that a good starting budget for online lead generation for real estate agents is $1,500 per month.
Don’t just run out and invest $1,500 yet. Every agent must accept that online lead generation is a long-term play. Doing it for only a few months won't fill your pipeline or change your business. You need to truly commit to it since the real estate sales cycle is so long.
Keep reading to learn about online ad spending for real estate agents, the difference between buying and generating a lead and the benefits of generating online leads from a third party vs. running and managing your campaigns.
Buying vs. Generating Real Estate Leads
Your CPL depends on where you're getting the lead.
Buying leads is done through a third party like Zillow, realtor.com, Agent Launch or if you're working in the new home market, NewConstructionHomes.com.
With these companies, leads are already generated and vetted to some extent. The benefit is you don't have to do the leg work yourself and the leads are targeted for your location and other parameters like the type of home they're searching for and budget, among other factors. For NewConstructionHomes.com, you buy the exclusive rights to all the leads generated for one market.
Traditional real estate lead generation campaigns with IDX websites (Real Geeks, kvCORE, etc...) force visitors to register before viewing properties or speaking with an agent. This is a flawed process for several reasons:
- Visitors may want to look at a property, not buy a property.
- Visitors may already have an agent and are simply doing their research.
- This process provides more quantity of leads than quality leads.
Buying leads is the more expensive option upfront but, ultimately, more cost-effective and productive. Sierra Interactive published an article about their average CPL and found it costs $9-13 for buyer leads and $26-30 for seller leads. Zillow's CPL can be upwards of $1000 or more.
If you’re generating leads through Google or Facebook, you’re paying for impressions and search volume and CPL is determined by supply and demand.
- If more people are paying for impressions, the cost increases.
- Times when more people are searching for homes result in a higher CPL.
- If fewer people are paying for impressions, the cost decreases.
- Times when fewer people are searching for homes lower the CPL.
A platform like NewConstructionHomes, which focuses on the new home market, lets you distance yourself from CPL by using a different process that includes:
- No forced registration. meaning leads are opting in to speak with a specialist instead of being forced to sign up to see value. They experience the value of the platform and then choose to proceed, in which case they have much higher intent to find an agent or buy a new home.
- Buyers are interested in new homes. According to a study from Zillow, new home buyers have an average household income that's 40% higher than the average homebuyer.
- New home queries on Google are more specific, indicating they are further down the funnel in their home search process.
- Agents can pivot to showing resale properties if they find a new home that appeals to them.
TIPS FOR TOP REAL ESTATE AGENTS: The typical real estate lead generation funnel has, on average, a 1% conversion rate. Agent Launch clients experience a conversion rate of 5%+
Resale Leads vs. New Homes Leads
For real estate lead generation, an important distinction to make is between resale leads and new home leads. What they're looking for is different, of course, but the difference that matters to agents is the cost-per-click (CPC).
The CPL for resale is $0.90-$1.25/click and for new construction, it's $2.75/click. Furthermore, new construction leads have a more specific intent, which can make them more likely to convert if the agent does their job.
Benefits of Online Leads for Real Estate
There are four benefits to online real estate leads:
- Online leads for real estate agents are predictable. A consistent funnel and strategy can generate roughly the same amount monthly. This will help you streamline your process.
- Online leads are highly targeted. On Google, you can target based on a user’s search history. On YouTube, you can target based on what videos a user watches.
- Online leads offer extensive reporting and tracking. Billboards and bus ads can create more impressions but you have no way of tracking it besides a rough estimate of how many people and drivers saw it, assuming they saw it.
Online lead generation is scalable. For instance, spending $1,000/month to get upwards of 70 leads can be easily scaled to $10,000/month to receive 600-700 leads. Off-line lead generation doesn’t work in a way where if you spend more you will receive more leads. It’s hit-and-miss. - Remember, a high volume of real estate leads shouldn't be the goal. Some lead generation campaigns can make you or your agents feel busy but it's a lot of wasted time working leads that don't pan out.
How Much Should a Real Estate Agent Spend on Online Leads?
A good starting budget for online real estate leads is $1,500 per month. With a $1,500 budget using a CPL of $15, you should get about 100 leads per month.
Starting with a lower budget will put the focus on the unqualified leads as you will most likely disqualify about 50% of all leads because they are unreachable, unresponsive or tire kickers (a reality for all agents). About half of all leads are dismissed right off the bat.
Real estate is one of the longest sales cycles, so starting with a budget of $1,500/month will start filling your pipeline over twelve to twenty-four months.
To stress an earlier point, online lead generation is a marathon, not a sprint. You need to commit to it for long periods, not just in spurts, as the real estate sales cycle is so long.
TIPS FOR TOP REAL ESTATE AGENTS: It’s okay to pause your lead generation for a short time to focus on pushing some leads through your pipeline to become clients and close deals.
Are Google Real Estate Leads Legit?
Online lead generation is a powerful asset for real estate agents and is proven to generate qualified leads and help realtors stand out in a crowded field.
The trick is to understand how to effectively use and optimize Google Ads to connect with targeted users who are ready to convert into leads, and clients soon after. It's also worth entering the new home market, which is flush with leads specifically searching for new construction and looking for agents like you to help them.
FAQ
How much should a real estate agent spend on online leads?
It’s recommended to start with a $1,500/month budget and scale from there. This should give you a decent number of leads once you’ve disqualified those that aren’t legitimate.
Is Buying Real Estate Leads Effective?
Yes, buying real estate leads from companies like Zillow, Agent Launch/NewConstruction Homes or another third party is an effective way to fill your pipeline, dominate an area close more deals.
What are the benefits of online leads?
Online leads are predictable, targeted, trackable and scalable. They can be more cost-effective if you properly manage your budgets and campaigns.
What is an online real estate lead?
An online real estate lead is a homebuyer or seller who has expressed some interest in your real estate services via an online platform or your digital marketing. For example, if a potential lead clicks on your Google Ad for real estate, arrives at your leading page and then submits a form, they become a real estate lead. It's then on the real estate agent to follow up to determine if they are a cold, warm or hot lead and work to convert them into a client.
