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Just came across this YouTube video of a news cast about a mortgage broker who was sold bogus leads from an on-line lead generation company. Lead generation might be one of the dirty little secrets of real estate and home finance. Or, depending on your opinion, it might be just another way of doing business.
Here is how it works:
You are walking through Costco on a Saturday afternoon looking for Cheerios and dish soap, and on the way out you see the flyer for mortgage and real estate services. You are promised a Costco gift card, or cash if you sign up. The same kinds of offers are made on line through sites like homegain.com, housevalues.com and lendingtree.com.
Your name is then pumped through a computer and distributed to agents and brokers who have signed up and agreed to pay a very hefty referral fee for your name. Nobody is checking to see if they offer the best services or the best rates. That is up to you. Typically you do not get the best of anything, you just get the people that are willing to work for less than they would ordinarily. Is that the best person for you? I don’t know.
Human nature works in a couple of ways. If the agent that you pick through that Costco service has 15 other clients who he does not have to pay a big chunk of his paycheck to support, who do you think is going to get his priority attention? My guess is it is not you. I could be wrong though. In then end you could be losing more than you are gaining by signing up for this type of service. Yes, a couple of extra bucks are nice at close, but not if they have cost you in additional marketing time.
Intrinsically I would agree with “When lenders compete you win,” but not when it is through a service like lending tree. Get referrals from your Realtor, friends and trusted sources. Compare the services you are offered that way. You are more likely to save money and get the best results when you work with someone whose income is derived from having an excellent reputation in your community which leads to repeat referral business, than you are from someone who is paying for your name from a marketing machine supported by pricey media campaigns.
As for Juan, the mortgage broker in the video, I hope he is looking for another way to find new customers, because buying leads clearly is not working for him.
[tags] lead generation, mortgage, real estate, lending tree, costco, homegain[/tags]
Written by Maureen Francis
SKBK Sotheby's International Realty, 248.430.4450
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{ 14 comments… read them below or add one }
Sock Puppet 05.27.07 at 1:38 pm
I’ll be honest, I’m “this close” to using one of these horrible “services”. No way am I paying the bulk of money up front though, it would have to have to come at the closing.
What I’ve seen offered out there, or even any regular realtor to realtor referral, is a serious chunk of change on any transaction. To the point where it’s basically 80 % of the profit for a closed transaction.
It would be essentially a loss leader of sorts looking for market share and a higher profile. But yeah, given a choice between a regular client or a referred one, I know who would would get the nod if I had to make a choice between them.
Consumers really need to be told by these services what they are getting themselves into.
-Athol
Maureen Francis 05.27.07 at 2:06 pm
Athol,
Beware. Over the course of the years I have paid and tried many of these services. Now I subscribe to none.
Yes, it is a loss leader. Yes, one is looking for more business. But what happens is that you are referred to clients who are outside of your selling area. Areas you know less well. My office used to be given a lot of referrals that were on the other side of the city and use a different MLS. Were we the ‘best’ choice for those clients as buyers or sellers. Probably not. But we had signed up for the program and were paying the fee.
I just do not think that consumers are aware of what is really happening behind the scenes. Their names are being sold without much concern for their actual best interests in the end.
I don’t know anything about 1-800-dentist, but I do not think that I would chose a medical professional that way. Perhaps they really are a great database of the best dentists.
I feel that consumers are being deceived by what those services are actually offering them.
Thanks for checking in!
Maureen
Sock Puppet 05.27.07 at 2:11 pm
Oh trust me Maureen, it’s eyes wide open here. “Do I want to do X number of transactions for X number of packets of Ramen Noodles.”
Also I figure if it really worked, why are they looking for new agents all the time. It should in theory all be locked up by successful agents…
john harper 05.27.07 at 4:27 pm
We have tried several lead generation services. None supplied us with quality leads. All of them supplied us with hassles and grief when we canceled the agreement because they did not live up to their sales pitch.
Get the salesperson to send you an email stating explicitly that they will stand behind the quality of their leads and that you can cancel at anytime if they fail to live up to their end of the sales pitch.
We developed our own online lead generation. We get two to three quality leads a day, that translate into at least one appointment a week.
We’re closing two deals this month from our online lead generation.
Sock Puppet 05.27.07 at 5:11 pm
Hi John,
it’s good to hear of someone getting results from the blog/website.
I can only imagine the hell of getting out of a relationship with these guys, I’ve personally lost it a couple times with the HouseValues people over the phone with them constantly calling me to try and get me joined up with them.
-Athol
Kristal Kraft 05.29.07 at 12:12 pm
When it gets right down to it there is no easy button! Realtors are always searching for ways to get more business, therefore the lead generating companies will be in business. The part I feel said about is how the consumer is treated, or shall we say mistreated.
kk
Greg Staker 05.29.07 at 1:46 pm
Lead generation companies provided decent leads in the beginning and then the well dried up when everyone and their brother’s uncle’s cousin got into the business.
Had we as an industry or as individual agents jumped into internet marketing early on these types of companies might never have gained a foothold.
When you start closing leads from your personal website or blog, your eyes open to how silly it is to give any outside referral company your hard earned money. IMHO
Very nice blog.
Roberta Murphy 06.02.07 at 9:21 pm
Maureen: We tried paid leads years ago and had some success. At the same time, many of the people we called seemed uncomfortable and wondered how we had gotten their name and telephone number.
I much prefer the business that comes from our own websites and blog. The connection is a direct one.
Good article!
Keith Jeppson 06.07.07 at 6:39 pm
After being fleeced by HouseHunt a couple of years ago I swore I’d never try another lead service again. And here I am paying $300 per month to MLSOnline. I’ve only been on it amonth and not to pleased yet. I figure I’ll give it 6 months at least.
They keep telling me they are doing some SEO to tweak my leads. Hm, I got one from Bill Gates this week but the phone number and email were bad? Oh back to the days of HouseHunt and donald duck leads.
Maureen Francis 06.07.07 at 7:26 pm
Keith, Keith, Keith…
I do hope that it works out better this time, for your sake.
Keith Jeppson 06.07.07 at 8:15 pm
Yeah, I’m kinda embarrassed about it. Don’t rell anyone. But, it does cover 16 cities in three counties and is a monthly deal in each city. I’m not locked into any longterm deals. I already know I’m dropping 5 that haven’t shown anything.
I guess if I’d just make my prospecting calls I wouldn’t have time to even think about lead sharks.
Maureen Francis 06.07.07 at 8:29 pm
I might agree with the latter. My newest web site is already generating a lead every day or so, and I pay less than $40 a month for it.
Ola Edvardsson 06.08.07 at 10:19 am
Hi guys,
Interesting post and interesting discussion. I would agree that many lead companies don’t do their job correctly.
In Keith’s example a minimum requirement would be for them to verify the accuracy of the data before passing it on to you.
In a perfect world this would also include a transition phone call confirming the consumers request to be matched with an agent and even a live transfer over to the agent with the end prospect on the line.
It goes without saying though that your own prospecting and lead generation is always going to be the most effective.
Regarding Costco…. I’ve started to see agents from local brokerage Real Estate One at my Costco warehouse in Commerce, MI working the gift card angle. Not sure if this is just a local thing or something they are shifting to nationwide?
All the best.
-Ola
P.S. Big congrats to the top 10 Google results Maureen!
Lola Audu 06.09.07 at 5:26 pm
Hi Maureen, Thanks for this post. It was very eye-opening. The fact is that the Internet makes this very easy to deceive…it’s impossible to track exactly what is happening with a lead. That’s why it is probably best to develop one’s own website & lead generation opportunities. I’ve found they are much better quality!