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Jeff Glover: The True Cost of Real Estate Buyer and Seller Leads

By Elizabeth Stormberg in Interviews on Sep 3, 2020

SUMMARY: Frank and Jeff Glover dive deep on how much agents are really spending on internet leads based on Jeff's extensive research. They explore which internet leads have the greatest return on investment and how you can leverage your database for low-cost lead generation.

[Full Transcription]

1:00 Jeff's findings through his study on the cost of leads

4:24 How many leads do I have to generate to do a deal?

7:14 How many buyer registrations on your website do you need to find someone who wants to buy a home within a year?

9:20 How many times should you reach out to a new lead?

11:42 What defines a middle or bottom of a funnel lead?

14:48 What does someone do to get business without going broke?

16:00 What do you recommend someone does when working their existing database?

18:57 How can you calculate your ROI on your lead sources?

 

Frank Klesitz:

All right, let's get everybody on here. Thanks for showing up. Thanks for everybody being here. I think we've got a recording here started and this is Jeff Glover. I watched a webinar a while back that you did, Jeff, that was incredibly insightful on the true cost of lead. And especially with everyone kind of being inundated with buyer leads now, because everyone wants to buy a house. Probably has only increased the message of what you said before on the true cost of lead. Cause there's a lot of leads home, so there's even more concerns. Right? So anyways, I'm kind of getting into where we're talking about today, but Jeff, let's just have you talk, man. This is your audience, the true cost of a lead, I guess it just starts off with you sat down, you did some calculations for leads versus for yourself high level.

Frank Klesitz:

And you spoke to many other top teams around the country that know their numbers, not making them up. And why don't you tell us what you're seeing out there? 

Jeff Glover:

So, what I found  in this little experiment is that many high level teams, including ours, by the way, to some degree were not, or are not taking into consideration the amount of time it's spend, the amount of time it takes to siphon through what people are calling the kind of top of funnel leads, the leads that, that enter into your funnel in one way or another, because they're going to do something six months from now. They're going to do something a year from now or 18 months from now. So this whole idea, basically what this study did is, is I kind of debunked this idea that we are looking for in prospecting for nurtures versus appointments.

What I uncovered is that never stop lead generating for appointments. Don't buy into this whole idea that nurtures are the way to go because of the amount of time it spends to follow up with the nurture, stay in touch with the nurtures. Now, listen, I get it. I took into consideration all the automated systems. I mean, I know I poke fun at myself on how I'm, you know, I was like the last guy in this earth with a Blackberry, but we've still had CRM for several years. I know how these things work a great CRM by the way. But the amount of time you spend going through the dialer, going through the CRM to find someone who's actually going to be doing something right now, because you have availability this afternoon or tomorrow morning to show houses is, is not worth it on some of these lead sources. And that's essentially what I uncovered. I went through all of the different lead sources and, and determined that the ones that are closer to the bottom of the funnel, although are more expensive, actually have a higher ROI than the ones that are top of funnel.

Frank Klesitz:

When you talk about top of funnel leads, let's get everyone up to speed. Generally, for most people you have some type of CRM, may different serum providers out there. Yeah. And they'll have an added service or they'll run Facebook ads or pay-per-click ads. That's CRM that captures them and brings those leads in. Yes. And the better leads, generally, speaking of your Pay-per-Click leads, they would say your internet leads. Like, because someone's going to Google saying, I want to buy or sell a home, share some search intent there. They're generally a little more expensive. They met with us in the more now and it's pay-per-click, but it's pretty much your duopoly of ads, either Google or Facebook, then from Facebook you'll run ads. You generally get more leads there. Cause there's no search intent. People are hanging out on Facebook, but will be cheaper.

Frank Klesitz:

Right? But the offer is pretty much the same. Whether you're going to Google or Facebook, Jeff it's, you know, go search for houses on my website, come search for houses on a website or get a list of properties for sale or for sale on this area. Those are pretty much the messages. And then for sellers, really the only one that people use at top of funnel, which is find out what your home is worth. Hey, if your home prices are up here in Detroit, no prices are up in the area and there's low inventories. CMA home is worth put in here. CMA talking about those leads today, right? For the most part, is that correct?

Jeff Glover:

That's correct. Yep. So everything, every single lead you just described is what we would consider, top of funnel, right?

Frank Klesitz:

Previously, maybe back in the day, when you were doing this, you would have to generate X number of leads, do a deal. And currently you went around various teams and you asked how many leads do I have the generic to do a deal? Will you tell us about how that spread keeps widening?

Jeff Glover:

Oh yeah. Yeah. Well the top of funnel leads. I mean we were in the hundreds for the top of funnel leads where the bottom of funnel leads are the more expensive leads, right? Say your Zillow's or your for sale by owners or your expired, the ones that are in have already kind of raised their hand. I mean, you're talking dozens versus several hundred and what people are considering is yeah. But the leads, the dozens are very expensive. Sure. A hundred bucks a lead 125, $200 a lead.

Jeff Glover:

Yeah, you're right. Per lead. That is expensive. But over here I can get 200 leads for the same price of your one Zillow lead. Yeah. But those aren't actually leads. Those are prospects. Those are names and numbers of people who are going to do something at some point in time, maybe versus the bottom of funnel leads, the ones that are coming in a little bit later in their home search, or a little bit later in their, in their search of, of, of what their home is worth. You're spending less time converting those. And so essentially that, that entire webinar that we did, it was called the cost of a cheap lead. I went through and discovered that your dollar per hour, right. Your dollar per hour, if you factor in how much time it takes to convert the top of funnel, the cheap top of funnel versus the middle or the bottom of funnel, you actually end up spending more on a 15, 20, $30 Facebook lead.

Jeff Glover:

Because the amount of time it takes for you to convert and the amount than the amount that you have to buy. So it's not just a matter of, well, yeah, they're cheaper, but you have to buy more, but watch this Frank it's yeah. They're cheaper. You have to buy more and you have to spend more time converting. Well, what is your time worth? Well, once you factor in how much time you have to spend converting, they're not cheaper at all. In fact, they're actually more expensive. And that's what that study I did uncovered.

Frank Klesitz:

So let's talk about some numbers. So let's talk about buyer leads and solid leads from your online sources, such as pay-per-click in Facebook, which is where these top of funnel, where most people pick off their quote unquote cheap leads just from Facebook. And there's many ways to people you can go to that will do this, but essentially the offer on Facebook is search for houses or take a look at pictures of houses or list of houses. How many buyer registrations, where you basically say- Hey, if you want to see the pictures of this house, you'll put your information in, or you have your third. You're kind of, you're asking me to register on your website to search for properties. How many of those do you need to actually find somebody that wants to buy a home? Let's say within a year?

Jeff Glover:

I mean, it depends on your actions. It depends on your messaging, but I would say you're close to a thousand. I mean, it is ridiculous. I have a thousand apps. If you want a sale tomorrow. Yes. I'm telling you tomorrow. So you want a sale tomorrow? Yeah. You probably need to have a thousand leads.

Frank Klesitz:

But let's just say,  what's your, you gotta look at the time period, but like, I don't know, it was a hundred leads to get a deal. What's the conversion rate here?

Jeff Glover:

It's around a few hundred. So depending on your message, depending on the price point, depending on your market, it's going to be anywhere between 150 and 250 top of funnel leads to have one sale in a 12 month timeframe.

Jeff Glover:

So just call it 200 to keep it simple. I mean, obviously there's a lot of variables Frank, right? Because average price point, what your ad looks like, what language you're using. I mean, you could put a, you could put an ad out for a property for lease and yeah. You could probably find a tenant within 10 days. But if you're in the higher price point, three, four, 500,000 bucks, several hundred of those leads are needed in order to find someone that's going to do something in the next 12 months that don't retire.

Frank Klesitz:

I've always heard like it's maybe a hundred or less, but the people that you talked to doing this it's around 200.

Jeff Glover:

Yes. That's personal experience. I mean, we've been doing it for two years now. I mean, I'm only sharing you personal experience plus the conversations that I've had with people. Maybe it is a hundred to one. But then I would say, okay, what is, what is your message? And are those really top of funnel leads if they're Facebook leads? No, I would argue that it's, that it's substantially more than a hundred to one page. Maybe pay-per-click maybe, but, but for most people they're not doing pay-per-click.

Frank Klesitz:

It's usually picking off Facebook. Let me ask you this. So you teach in the last webinars, just three and three volunteer times, right? Column three times.

Jeff Glover:

It's three calls, three texts, and three emails in three days. Got it. Three calls, three texts and three emails. And that's the formula that we follow on a new lead that we haven't reached yet.

Frank Klesitz:

Let me get this straight. You have to do arguably 600 attempts to reach out to the 200 leads that came in to get one buyer deal.

Jeff Glover:

Well that would be 600 calls. Yeah. For calling them three times. Yeah. So, no, it's actually six, 12, 1800 attempts.

Frank Klesitz:

Cause it, yeah. You unpackage them all as one that's really 1,800 with all the three medias. Yes, my goodness. Alright. So I would probably say Facebook leads are your cheapest.

Jeff Glover:

And can I tell you why that is? Can I tell you why that is Frank? Because it's all about being in the right place at the right time and the problem with the whole idea of nurtures is they're not anywhere near ready right now. So agents do all their aggressive follow up techniques now upfront, and then just set them on a drip campaign and forget about them. When really those people don't need the aggressive approach upfront. They need the aggressive approach six months from now, 12 months from now. Well, six to 12 months from now, Frank, these most agents forget about that lead that came in. They forget about the, the, the, the week conversation that they had with the buyer. Cause they just set them up on a drip campaign and forgot them.

Frank Klesitz:

Okay. So Facebook pay-per-click those you're going to have leads. I would assume that you did this for a while. Maybe you're doing it at a lesser level. You made a switch for, I think you were doing this at one time, but then you, like, we need to stop doing that because it was getting too expensive. Is that correct? Or are you still running this stuff or where do you stand on your team with running this type of online lead generation?

Jeff Glover:

So we dialed back. Some of our spend obviously during COVID we did, but no, our spend on the middle or bottom of funnel leads as has remained about the same over the last several years.

Frank Klesitz:

So let's talk about middle and bottom of funnel. What do you mean by that? To the audience here? As far as offers you're putting on the marketplace?

Jeff Glover:

Yeah. So, so middle of the funnel would be defined as a, we're just starting our home search and we wanna, we want to get out and see some homes. All right. That's middle of the funnel. Bottom of the funnel would be, we've been looking at homes. We need a new agent. This agent is not working out, or we've been looking at homes. We want to put an offer in, but we don't want to use our previous agent cause we're not getting any offers accepted. That would be bottom of funnel. Basically, bottom of funnel is anyone who's ready to write an offer in the next week. Middle of funnel is anyone who's going to do something in the next month or two, top of funnel is six to 18 months.

Frank Klesitz:

What about sellers offers for sellers middle, top, middle, bottom of the funnel. Would you say so top of the funnel is find out what your home is worth.

Jeff Glover:

That would be a general CMA. And I mean, we even actually developed our own technology. Yeah. You, Upraze, we turned it into an iBuyer. Upraze, if you want to check it out. But originally we had the thought process that we could get them a little further down the funnel, by getting them involved, they can send pictures right through an app. They can put it in their improvements and we can give them a more accurate value for their home. Then they're going to get on Zillow.

Jeff Glover:

And so we've got a lot of experience in, in these, these types of conversations, just because of that particular application

Frank Klesitz:

So again, let's go through middle and bottom of the funnel for seller leads. So top of funnel is a free CMA. Whether you do that or your system online, does it instantly within your free home value report. What would you say the middle of the funnel is for a seller lead?

Jeff Glover:

A middle of the funnel for a seller lead would be somebody who wants a realtor to come out and give them an idea of what their home is worth.

Frank Klesitz:

It's a real CMA.

Jeff Glover:

Yeah, there you go. So top of funnel, you have the online CMA and middle you have an in-person CMA and bottom of the funnel, and bottom is we're interviewing agents to list our home for sale.

Frank Klesitz:

So let's speak to an agent, that's doing a couple of deals a year and really gets seduced by the idea that I can give money to Facebook and Google and get leads. It's probably not what you're teaching and maybe find out available. What, what do you recommend? What do you knowing this knowledge or somebody could go back and watch your previous webinar, where you really broke down all the details of how you came to this. What does someone do when they need to get business without going broke and having to spend all this time nurturing people that aren't interested in buying or selling a home right now, maybe from internet leads, which you're not a big fan of so much.

Jeff Glover:

Using the rankings, I just gave you top of funnel, middle of funnel, bottom of funnel, where can you find people at the middle or at the bottom for a low cost? Right? So, so of course, Frank, and this isn't going to be a surprise to you on sellers, who's at the bottom low cost for virtually nothing expireds, FSBOs. People who have raised their hand already and said, we're selling. Even though we're selling on our own maybe we're open to an agent on the buy side. You've seen a lot more of these with inventory levels being so short, you want to get clients on the buy side, you're going to do without spending money. You're going to do as many open houses you can because you're getting out in front of people that are looking at homes. And so, again, I'm not telling you anything you don't know, and anybody watching this is like, duh, we've been hearing that for years, right? But unless you want to spend money, that's where you have to go.

Frank Klesitz:

Got it. When it comes to working in agent's database, expireds, FSBOS, whatnot, the other crap past clients and sphere. What do you recommend someone does when they're working their existing list?

Jeff Glover:

Well, for starters, your database is not going to give you as much immediate business as like an expired or ask them for sale by owner. You have to, you have to add value to your database over the course of 12, 18, 24 months in order to start to see a return from it. And for a new agent, adding value means one thing, ready, building credibility. When, when you have your database starting out, brand new, your number one job with everything you send out to your database is to build your credibility. And you do that through touting the company you're affiliated with every time you sell a house, every time you list a house, right?

Jeff Glover:

You build credibility with these people. So that in 18 to 24 months, they will feel better about referring you to their friends and family, which usually people are sensitive to doing initially. That is where I would spend all my time with my database initially early on in the business, it's building credibility. And then once you have the credibility, it's about giving back and being the resource, being like the one stop shop for everything they need in their market relating to the real estate business.

Frank Klesitz:

You do a very good job in that, in your coaching company, Jeff. Alrighty. So I think really what I want to put this seminar on is just if you're buying leads off Facebook, you're looking at about 200 people that you have to call and work to find somebody that wants to do a deal, roughly speaking within a reasonable timeframe, where it's easy to get caught up in the elixir of that, and I might get a couple of leads coming in.

Jeff Glover:

Yes, by the way, there's always going to be someone out there. And I wouldn't be surprised if we get some comments or whatever saying, well, that's not true. I just bought my first, I just did my first Facebook ad for Facebook lead ad. I had a deal after 27 leads came through. Well, yes, you're going to have some one off cases where that happens. But if you actually average it over the course of several months or a year, you'll find that it's, that number is actually closer to 200 names and phone numbers that you need per transaction.

Frank Klesitz:

What advice do you have when someone's trying to calculate the return on their investment in their time? Would you just give me a little bit about how someone would actually currently find their true cost of your leads? If some were to say, I've been kind of dabbling over here, I'm doing something here, something here. I just need to know where my business is coming from. I need to actually figure out maybe some way of knowing what my ROI is because I'm, I'm totally lost. Could you point that person's direction, maybe do like an ROI or lead source audit and factoring in all the variables, so know where they stand.

Jeff Glover:

Yes. So I would look at basically three things. Number one, I would look at the actual, which is the obvious one, the actual cost per lead, right? So you figure out what you're paying per month, how many leads you're receiving. I would look at the time that you spend converting those leads and this takes into consideration time spent showing homes. And the reason why that's important that you factor in time spent showing homes is because watch this, Frank, even if you do get out of 200 Facebook leads, let's say a dozen of them agree to showing agree to looking at home. Out of those dozen, 10 or 11 of those are not going to be ready to do anything right now. So now you're out spinning your wheels and spending time with someone who isn't in a position to do something. So you have to factor in time, spent converting, time spent showing and time spent closing that that particular lead source. And then if you really want to get granular, you want to find out your cost per lead and your potential ROI or lack thereof, you figure out how valuable your time is spent working in other source and how much money, opportunity cost, how much money you're losing out on by working a weaker source or a top of funnel source versus a source that's middle or bottom.

Frank Klesitz:

Do you see many agents now starting their entire business, just on internet leads alone?

Jeff Glover:

Yeah, I see them attempting to, and here's what happens. A few transactions on internet leads could lead to a few referrals and then a few transactions on internet leads can lead to open houses, which can from there lead to a few referrals. So don't get me wrong, I'm not saying it's a bad idea to work this source. The I'm just saying, you need to be mindful of how much time you spend working this source and how much business you could be losing out on because it consumed so much of your time for so few transactions for everyone.

Frank Klesitz:

I just have one more question. You're a smart guy. Thank you for doing this for us. When you factor in like, okay, well I want to hire an ISA to make calls. And you factor that in of whether you hire a third party company that can probably be, get it done as they say for a couple hundred bucks a month. Or you go full blown, I'm going to hire my own dedicated ISA, which is probably all I'm going to run you about two to $3,000 a month. Give me your thoughts on that.

Jeff Glover:

If you're a productive agent and you realize the value of your time, because it can be spent doing other things. I am in full support of that, but now it goes back to it's affecting your ROI per transaction. Now it could be helping your ROI because you're not physically involved in that transaction anymore. But I would not encourage an agent who's not doing anything else to just go that route because then I'd ask, how else are you spending your time, right. If you don't, if you're not spending your time doing anything else, you now are increasing your expenses to have the same result.

Jeff Glover:

But if you are effective in another source of business or you are effective with, with another lead source, well then yes, it might make sense to hire a third party company to do that because you can prove, well, I'm more effective over here. And that's, you're right, Jeff, that the ROI on my time is lower on the source. So I'm going to farm that out. Well, if you farm that out, you just need to, then that removes the opportunity cost argument. And I love that. I'm a fan of that, but you're still going to, you're still going to have an ROI on your lead cost and that's still going to impact your ROI- good or bad.

Frank Klesitz:

Any last thoughts? So let me ask this last question. Where can someone go to watch your original video that you did on the true cost of lead?

Jeff Glover:

So I would just Google the cost of a cheap lead. If you just Google search costs of a cheap lead, it should come up. And I actually share the actual numbers. I mean, we're just talking in generalizations right now, but I actually go through the numbers per lead source. I talk about Zillow and realtor.com and Facebook and Google. I go through all of those.

Frank Klesitz:

Any stories of changes agents made to their business after watching that Jeff?

Jeff Glover:

Well, I think, I think Zillow's stock may have went up because of course I know everyone throws tomatoes at me when I, when I boast about Zillow and don't get me wrong.

Jeff Glover:

I mean, I'm not totally thrilled with the way Zillow operates, but I will tell you, our ROI is higher on Zillow all in time, showing, closing, converting, all of that. Our ROI is higher on Zillow than any other buyer, internet lead source. I don't have any stock and Zillow. They didn't pay me to say that I don't work for Zillow. I'm not an employee because  you go to the Zillow website and someone's putting their information because they actually want to talk to an agent. Yeah. Whereas would you go with the CRMs? The action is usually the rep, whereas at the CRM, it's more,  put your information to search for houses. Always great to chat with you, Frank.

Topics: Interviews

Elizabeth Stormberg

Written by Elizabeth Stormberg

Elizabeth is the Chief Marketing Officer at Vyral Marketing.

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