Gary Keller once observed, “Nothing happens until someone generates a lead.” The truth is that nothing usually happens when someone does generate a lead. Although lead generation is critical, what matters most is how many leads you ultimately convert and close.
Your job description as an agent can be reduced to six words: “generate leads,” “convert leads” and “close transactions.”
Lead generation and closing transactions — an issue
The challenge today isn’t lead generation or closing transactions — it’s lead conversion.
For example, Zillow, Trulia and realtor.com alone generate close to 100 million unique visitors each month — that’s 20 times the number of transactions predicted to close this year.
Even though the National Association of Realtors’ research shows that half of all buyers have to sell a home before they can purchase their next property, agents still ignore hundreds of leads every year. In fact, over half of the Internet leads never even receive a response.
Moreover, in a realtor.com study of 20,000 agents’ incoming calls, a live person answered the call only 30 percent of the time. Of the calls, 45 percent went to voice mail, 17 percent were either busy or no-answers, and 8 percent had inadequate information. Even if conversion happened on half the calls answered, and that’s incredibly generous, that means that 85 percent of these leads were lost.
Once agents convert leads, about 90 percent of those clients placed under contract ultimately do close. (The one exception is in multiple-offer situations where the fallout rate can be as high as 50 percent.)
The abyss in the middle
If you search “real estate lead conversion tools,” you will find a wealth of information on how to convert leads. “Conversion,” however, is defined as setting an appointment. There is virtually no discussion of the second and third steps — persuading the buyer or seller to sign a listing or buyer agreement and then generating an offer.
In a recent Inman article, RealScout CEO Andrew Flachner coined a new term that should become the mantra for every agent — “offer generation.” The old 20th-century mantra was, “Always be closing.”
Go for the close 21st-century style
Many agents cringe when you mention using scripts or closing strategies. I hear things like: “Using a script doesn’t sound natural,” or “I don’t believe in manipulating my clients.”
Both of these observations are correct when you close “20th-century style.” The old model was “hunt ’em, tell ’em and sell ’em.” Hunt down your leads, tell them how great you and your services are, and then close them with whatever works. This approach often led to manipulation. Furthermore, it not only gave real estate agents a bad name, it often resulted in “closed” clients becoming “unclosed.”
If you’re ready to make the leap to generating offers 21st-century style, here’s what you do:
1. Question, question, question
To make the shift to offer generation, set up the closing scenario early in your relationship. Next, continually ask questions that help your clients move to the offer-generation stage.
For example, when you first start working with a buyer, spend at least 30 minutes interviewing her about her lifestyle. Ask about her career, what is important in her future home, where she spends most of her time in her home, as well as what recreational activities she enjoys most. Make a detailed list and have her prioritize her list. Now here’s the critical question that sets up the closing opportunity:
“When we finish looking at each property, I will ask, ‘Will you be writing an offer on this property, and if not, why not?’ Your answer helps me to understand better your top search criteria — is that OK with you?”
This simple approach lets you close the buyer after every single showing.
2. Objections are buying signs
When you start explaining or telling your clients why they should do something, you have lost the battle. Many agents fail to realize that objections are buying signs. The only time buyers seriously object is when they see themselves living in a given property. Here’s a case in point:
When a buyer says, “I hate this ugly gold carpet,” many agents launch into an explanation about how the buyer could ask the seller for a carpet allowance. In other cases, the agent assumes the buyer doesn’t want the property and moves on to the next showing.
The way to move the buyer closer to writing an offer is to ask the following question:
“Would you replace the carpet or refinish the hardwood floors?”
This question forces the buyer to respond as if he already owned the property, thereby overcoming the objection and moving the client closer to writing an offer.
3. Generate a “reverse offer”
The “reverse offer” can be used when buyers are hemming and hawing but appear to want the property. Rather than waiting for them to decide, some resourceful agents persuade their sellers to propose an offer to the buyers.
Although most places in the country are in a seller’s market where this is unnecessary, it’s still a useful strategy when negotiations bog down. Here’s how it works:
Assume that your sellers and the buyers are still $10,000 apart. There’s no more wiggle room in the price because the buyers cannot qualify for more. At this point, the sellers could make a reverse offer to the buyers with an interest-rate buydown for one year. This allows the buyers to qualify for a higher price because their first-year payments are lower. Also, the interest-rate buydown is less expensive than taking the $10,000 hit.
So here’s the bottom line: Perhaps it’s time to spend less money on lead generation and to focus more on lead conversion and offer generation.
Bernice Ross, CEO of RealEstateCoach.com, is a national speaker, author and trainer with over 1,000 published articles and two best-selling real estate books. Learn about her training programs at www.RealEstateCoach.com/