How Much Do Real Estate Leads Cost?

Paid real estate leads typically cost $20 to $100 each, or $300 to $2,000 a month for a subscription in a given area. Exclusive leads cost considerably more than shared ones. The figure that actually matters, though, is cost per closed deal, which is usually between $1,000 and $3,000.

Why the range is so wide

Three things drive the price, and all three are negotiable to some degree.

• Exclusive or shared. A lead sold only to you costs several times one sold to three agents. Shared leads are cheaper per lead and require a much faster response.
• Price point and area. Leads in a high-value zip code cost more, because more agents want them.
• Stage of the lead. Someone who requested a home valuation is further along than someone who clicked a listing photo, and is priced accordingly.

The number that actually matters

Cost per lead is the figure vendors put in front of you, and it tells you almost nothing about whether the spend works.

Work out cost per closed deal instead, before committing to a year.

Whether $1,250 per deal is excellent or terrible depends entirely on your average commission. At a $6,000 net per transaction it is plainly worth it. At $2,500 it is not. Know which before you sign anything.

What conversion rate should you expect?

One to three percent is a realistic range for internet leads worked properly. Agents who quote much higher figures are usually counting differently.

That number is not fixed. It is mostly a function of two things: how fast you respond, and how many times you attempt contact. Both are entirely within your control and both are where most of the variance between agents comes from.

Are cheap leads worse leads?

Usually they are the same leads, sold to more people.

A shared lead is not lower quality. It is a lead where three or four agents received the same contact details at the same moment, so the person who calls first has the conversation and everyone else is the third caller of the morning. That is a speed problem rather than a quality problem.

If you cannot respond within minutes during business hours, exclusive leads are worth the premium. If you can, shared leads are often better value.

What else should you budget for?

The subscription is rarely the whole cost.

Many vendors charge a setup fee, some require a minimum term of six or twelve months, and several have a referral model where you pay a percentage of the commission at closing instead of or in addition to a monthly fee. A 25 to 35 percent referral fee on a closed transaction is a very different economic structure from a flat monthly spend, and it should be compared as such.

Should a new agent buy leads?

Usually not in the first year, and this is the most useful thing on this page.

Paid leads pour into whatever follow-up system you already have. If you do not yet have one, you will receive forty names, contact eight of them twice, and conclude the source was bad. You will have wasted both the money and the leads.

Build the database and the follow-up habit first using free pipelines, where the cost of a mistake is a Saturday rather than a thousand dollars. Once your follow-up survives a busy week, paid leads have somewhere to land.

What should you ask a vendor?

1. 1Is the lead exclusive to me or sold to several agents? This changes your required response time from fast to immediate.
2. 2What is the minimum term? Month to month is worth paying more for while you learn whether it works.
3. 3Where do the leads come from, and at what stage are they?
4. 4What does your average client convert at? Ask for a number. Vagueness is an answer.
5. 5What happens if I need to pause? Ask before you need it, not in the month you are short.

What should you track?

Four numbers, monthly, from the first month.

Contact rate, which tells you whether speed is your problem. Appointments per hundred leads, which tells you whether your scripts are. Closings, which lags by months. And cost per closed deal, which is the only figure that decides whether to continue.

Also track long-term conversions. A meaningful share of paid leads close in month nine rather than month one, and agents who judge a source after ninety days routinely cancel something that was about to work.

The Pipeline Audit scores internet lead conversion on five checks, including response time, attempt count and whether you know your cost per closed deal. If you are already spending, it will tell you in twenty minutes whether the money or the follow-up is the problem.

[Download The Pipeline Audit (free)](/free/pipeline-audit/)