Comparing referral Real Estate leads and self-generated Real Estate leads

Years ago I was a brand new, still in the wrapper, broke ass Real Estate agent and was unable to generate new business because I was taught that the best clients to get were my family and friends. I was not interested in feeling like a parasite and stubbornly refused to use my personal connections to drum up business. I always hated when people found a new career selling vacuums or long distance service and preyed upon their friends and family to drive their new endeavor. Obviously I was one of their first victims/leads on a number of occasions or I may not have felt this way. This strained our relationship and made everyone feel a little uncomfortable.

One of my worst and first entrepreneurial experiences was when I was still in the military. I was new on base and had no friends or associates. I was young and on my own for the first time and one of my older more experienced co-workers invited me to a party at his house. I felt like I had made a friend and I was really excited to be invited to a party. I got to the party and my outlook changed a bit when I was made aware of the fact that the direction as the party was 100% Amway. Not that Amway is a bad thing. It was just that I thought I had made a friend and friends don’t want things from you. Friends want to share things with you.

So it gets back to my being told to ask my family and friends to buy or sell their house using me. This on top of the fact that all of my family knew that I was not seasoned at all. I had no experience and I was supposed to ask them to trust me with their most significant purchase or sale. Frankly I couldn’t do it. I could not bring myself to ask them to trust me when I didn’t trust myself 100% yet. After all I had never sold a home before and who knows what was going to happen that would throw me into a tail spin?

So there I was with all the desire in the world and a self-imposed restriction that kept me from tapping on family. What was a young, broke Realtor to do? I started by asking my broker for some leads and he gave me some names from the bottom of his drawer and he told me “If you sell anyone from these (old as dirt) leads you owe me 25% referral fee” But hey, that was OK because they didn’t cost me anything. I called each and every one of those leads and when I say they were old I mean they were looking for caves and lean- to’s!

I didn’t sell any of them a home because most of them had moved into a retirement home since they had generated the lead. What I did get was a better understanding of just how many people were out there in the big blue world and how many opportunities there were to sell homes. Sure there are lookie-loos and dreamers without credit. People that hadn’t paid a bill on time since they were born and people who lied about everything, but through it all there were also some really nice people who just didn’t know how to go about the process of buying a home. These people were not going to buy mansions or million dollar homes on the water. They wanted to buy their first home. They had the crazy dream of owning the roof over their head and building equity for the future. Their biggest problem was that most agents that had been in business for a period of time or “experienced” realtors were not interested in helping because their price point was too low. This was a great opportunity for me so I beat the garbage out of it. I was new and they were new and we all got along just great because I listened to them.

In order to keep this great thing rolling I advertised constantly and drove more leads than I needed knowing that only about 10% of buyers are serious. If I closed 10% of my leads I felt like I had done a good job with my follow-up. When I exceeded 10% and hit 12 or 13% I considered that excellent. Keeping these ratios over the course of over a decade, this ratio never went below 8 and never went over 14 percent. This was measured on a weekly basis and I didn’t expect that every lead was going to be a deal. Not everyone that walks into the mall walks out with a bag from every store and I didn’t try to make this happen, I listened to the buyers and showed them only the homes that met their requirements and sold more homes than anyone I knew. No million dollar homes, just lots and lots of homes from lots and lots of leads.