Market Shift: Team and Broker Lead Gen In the NEW Lead Gen REALITY
Revaluate will publish several posts on the Real Estate market shift as it unfolds. These will be part data, part prediction, part planning and cover everything from real estate stocks, market trends to daily activities and lead gen for individuals, teams, brokers and brands.
There’s good news for those of us in the Real Estate lead gen world and those that sell homes or home mortgages. Even in down times, like the great recession, or the first year of the pandemic, the number of home sales per year does not change very much. People move despite high interest rates, stock market crashes and wars. Because, while in all of these situations, SOME people are removed from the potential mover pool, other people keep having life events that require moves. In the graph below, you can see that home sales have been on the up tick recently. Statista predicts ever so slightly fewer sales this year. That’s 2.8% fewer home sales than last – despite the current talking heads forecast of doom and gloom.
However, that doom and gloom will certainly hit a certain segment of the population.
The changes most people see are rising interest rates (well duh, they already are up) that may continue to climb. How high? Self-described “not an economist” (and RE industry consultant) Rob Hahn made a very astute point on the Industry relations podcast last week, and Ill paraphrase: The home loan interest rate is lower than inflation. (IE Loan is 6%, inflation is over 10%) That’s not in balance.
Think of it this way: Currently, the bank is paying home buyers to borrow money! So when the fed raises rates – it’s conceivable that the interest rate will raise to just above or equal to inflation. But till that happens (or inflation drops) with this logic, its still “good” money to borrow.
That indicates that savvy buyers will continue to buy.
Other good news is that home inventory and home pricing has improved. While it’s not back to pre pandemic levels (still 50% less) it is back to the predictable trend line and seasonality. In short – inventory is acting predictably again.
In order to prepare for where this market shift is headed, let’s look at how lead gen and revenue generation will be impacted by the predicted changes.
Buy The Numbers
Last year there were an estimated 100 Million leads generated, and bought by the real estate industry, with big daddy Zillow alone generating 17 Million leads. Yet only 6 Million homes were sold. You dont need a degree from MIT to know that’s a poor ratio.
The price of zillow leads is tied to home prices – and perhaps you’ve noticed that home prices are up a tad. Single family avg list price nationwide was $355k in July of 2020 and up to $451k today. That’s good for a stunning 27% increase over two years.
- There were 6.1MM housing transactions in 2021 out of roughly 124MM total households (roughly 5%)
- Historically, buying internet leads provides you only a 3% edge on literally picking up a phone book (do they still make those?) and dialing randomly.
- Average CPL for an internet lead from Zillow or the other portals? $20-$60 on the low end
- Average conversion rate on those leads? 2% down to .8%
- True lead cost of a transaction? $600-$1200
A Marketing Shift
Most people own their database, But very few OWN the lead gen process. Here we will describe how some of Revaluate’s top performing agents, teams and brokerages have shifted their process to take advantage of the current market shift, save money and automate their process for maximum efficiency.
Blanch is a ficticios single agent who has been doing well in her market, and prefers short walks on the beach b/c they are more efficient and she can still post about it on instagram. She has 10k contacts in her database because its a nice easy number to deal with… but also a typical avg for successful single agents. Blanch’s 10k contacts are in a targeted area, complete with cellphone, email, address, and name. These are a mix of old zillow leads, sphere, past clients, Girlscout cookie lists and folks from her golf club phone directory. Part of this list is also a” have not met” geo data farm. (perhaps it was from Revaluate’s Reside Farm Product)
- Revaluate cost to monitor 10k contacts for a year is $.90/contact/yr
- Revaluate will surface 6-10% of the database as likely movers = 600-1k “leads”
- Revaluate Likely Movers have a 1 in 5 (19.5%) listing ratio. = 120 Listings that will happen out of 1k “leads”
- Compared to internet lead averages where 80 listings will happen from every 1000 leads
Annual cost of lead gen acquisition
- Revaluate = $9k
- Portals = $60k
So Blanch shifted her marketing spend and process to center around her own database of contacts, to create a super efficient process that is automated. In her case, she uses a great CRM like any of these that integrate Revaluate.
Let’s say she uses FUB currently to manage her database. Revaluate scores all the prospects in her database every night (and thats a bit overwhelming for her) but forntunalty she has set up automations that include Ylopo – so when people become more likely to move, her system automatically sends the right marketing message to the right people at the right time.
Higher probability of conversion, for ⅕ of the price and it functions behind the scenes automatically. Thats a smart marketing shift to mirror the changing environment.
Unrelated – Anyone spot the shifter in our header graphic? It’s the gated shifter from an early 80’s Ferrari 308, you may recognize it as the kind car Tom Selleck drove in Magnum PI.