Aiva
Qualifying Leads
What is LPMAMA in Real Estate?
Learn why we found that a low cost per lead can be pretty bad when it comes to Facebook real estate leads.
If you’re a real estate agent buying leads online, you have three options: Pay Per Click (Google Adwords), Social Media (Facebook), or Portals (Zillow, Trulia, Realtor.com). There are plenty of other lead generation companies, but they are simply advertising on Facebook and Google on your behalf and selling those leads back to you with a margin. Cost per lead on portals or PPC is tough to reduce, the portals set their own prices per zip code and targeting options on PPC are pretty limited. But Facebook real estate leads can be a gold mine for agents.
Facebook is a whole new world of opportunity when it comes to real estate lead generation. You can customize so many targeting factors such as interests, creative, text copy, call to action, and demographics. And the more you customize and tweak, the better your results get!
For example, we’ve heard agents generating leads at below $3 per lead! Compared to a $50+ per lead from the portals. A $3 cost per lead sounds extremely tempting, but what’s what catch? Poor conversion.
Each week speak to at least a dozen agents to help them with their real estate lead generation strategies. Because our service Aiva helps real estate agents qualify leads, we have unique insight into not just the volume and tactics agents use to generate leads, but also the quality of the leads. We help agents A/B test various strategies they use to generate leads and provide them the data and feedback necessary to optimize their campaigns.
So after analyzing over 10,000 lead Facebook real estate lead conversations, here are the top three insights we have generated:
#1 – Asking for a lead’s email is the cheapest, but lead quality is bad
You can easily get someone to give you their email address for the $2 to $3 cost per lead range, but how hard is it to get in touch with someone via email and turn them into a customer? Very.
Contact rates for leads that provide email addresses are at least 4-5x lower than for leads that provide phone numbers, that means $2.50 for a lead that provided their email is great, but you might need to get a few hundred or so of these to turn one into a closed deal for you.
For example, with a $4 cost per lead for an email lead, with a 0.2% conversion rate into a closed deal means for every $2,000 you spend, you can expect to close 1 deal. The cost per conversion is incredibly high especially given that the average commission check is closer to $1,500.
#2 – Asking for a lead’s phone number is costlier, but cheaper overall than just email
Getting a lead to provide their phone number is more expensive, almost 2-3x more expensive than an email address, but the contact rates and conversion rates are at least 4-5x higher than just getting someone’s email. So you might pay $7 to $12 for a lead with a phone number, but you might only need a few dozen to turn someone into a closed deal. In addition, you can now email, call, and text these leads which means higher contact rates, and at a certain volume it might even make sense to build your own real estate inside sales team.
For example, with a $10 cost per lead for a phone lead, with a 1% conversion rate into a deal means for every $1,000 you spend, you can expect to close 1 deal. The cost per conversion is much more reasonable and you can expect to make a real profit on this strategy.
#3 – Facebook lead ads are cheaper, but lower quality than leads from landing pages
Facebook lead ads are popular amongst real estate agents because they’re cheap and can generate volume quickly. But these leads are generally not interested in taking on the phone or chatting about anything beyond the item of value (list of local homes, buyer’s guide, etc.).
Instead, if the lead has to click on the ad, go to a landing page and then submit their information, you are likely to pay 1.5-2.5x more on a cost per lead basis (because of the added friction), but your lead quality is going to be definitely higher. These people are more serious about buying or selling because they went through the trouble of clicking your ad and then submitting their information.
When it comes to generating real estate Facebook leads, your mileage can definitely vary across locations and strategies, but the silver lining here is to never solely focus on reducing your cost per lead. While it’s important to track it, optimizing for the lowest cost per lead can really hurt your ROI in the long term.
