Buying real estate leads may seem like an easy way to find new clients. However, the reality is most of these leads are cold prospects that go nowhere. Even worse, they distract you from connecting with the people who are most likely to grow your business. Here are three reasons why you should not pay for real estate leads.

  1. Paid Leads Are Expensive

Relying on paid leads as your main source of clients will cost hundreds, often thousands of dollars. With such a high cost, there should be great reward, right? Unfortunately, this is rarely the case. Many of these leads are underqualified and simply don’t pan out. Plus, purchased leads know nothing about you or your business, making them more difficult to nurture and convert into quality prospects. The bottom line is paid leads are a costly expense that rarely lead to actual sales.

  1. Buying Leads Is Highly Competitive

When buying real estate leads, you’ll face stiff competition with other agents as many leads are first come, first serve. This means you’ll often find yourself being outspent by bigger real estate companies that can afford to pay for more. Plus, even if you obtain a lead, you’ll still be competing against other agents as your potential client could still be searching for an agent. Remember, a paid lead does not equal a client.

  1. Paid Leads Can Result in Burnout

While making phone calls will always be a part of life as a real estate professional, cold calling paid leads is especially draining. Unfortunately, many of these underqualified prospects will not be ready to speak with an agent, and you’ll end up with negative responses from cold leads. The more you keep reaching out and getting nowhere, the more likely you are to get frustrated and burn out.

Be Proactive in Your Real Estate Lead Generation Strategy

According to a recent report by NAR®, almost half of home buyers used an agent that was referred to them by a friend, neighbor or relative. What’s more, a whopping 90% would recommend their agent to others. These numbers demonstrate that the best way to build your business is by gaining referrals – not buying leads. And the best way to gain referrals is by taking a proactive approach in your marketing strategy. This means reaching out directly to your sphere of influence to build relationships and set yourself apart from the competition. Here are some great ways to make this happen:

  • Connect With Your Sphere of Influence. Your sphere of influence is everyone you know and who knows you, from friends, family and social media contacts to your hairstylist and your child’s soccer coach. Create a list of all these people and reach out to everyone on it by mailing a letter and then following up with a phone call about two weeks later.
  • Provide Consistent Value. When you reach out to your sphere of influence, determine your top people by asking each person if you are their go-to person for all their real estate needs. Once you figure out your top people, stay in consistent contact with them by mailing or emailing them useful information – from market updates to life hacks.
  • Ask for Feedback. Send your past clients a brief survey a month after they move into their new home. Ask them how satisfied they were with your service and the overall process. Your clients will appreciate you checking in and that you value their feedback.
  • Send Cards on Special Occasions. Sending holiday or special occasion cards to your past clients is an easy yet memorable way to stay in touch. Your thoughtfulness will stand out, making them much more likely to refer you to others!

When you take the time to invest in your relationships, you’ll no longer feel the need to fall back on costly paid leads. Leverage your sphere of influence and start generating a steady stream of top-quality real estate leads today!