Using paid leads? Here’s the FCC change you need to know now

Do you pay a lead generation company or a portal such as Realtor.com or Zillow for real estate leads? Do you prospect strangers by phone? If so, there’s a new FCC rule that says, “No telemarketer may make or cause to be made a telephonic sales call to a consumer, without the consumer’s express written consent.”

The big question is how these changes will impact agents, teams, as well as the portals and lead generation companies who are in the business of selling leads, often over and over. 

When I first heard about the “express written consent rule,” I reached out to Curtis Fenn, the President of REDX, about how these new rules would not only impact REDX’s lead generation business, but also what the impact will be on agents, teams, and others who rely on a paid leads model. (Full disclosure: REDX has sponsored my Awesome Females in Real Estate Conference since its inception in 2007.)

Major changes in the lead generation environment

Regulations about cold calling, the Do Not Call List, and robo-dialing date back to the Telephone Consumer Protection Act of 1991. These regulations were meant to address early robo-dialing systems that were linked to a computer that randomly made up phone numbers for the system to call. When someone answered a call, they were connected to a telemarketer who pitched them. 

“The laws came into play because people were tired of being bugged by these calls. A major challenge for regulators has been addressing changes to these older laws when the technology has changed so drastically,” Fenn said. 

“What they’re saying about prior consent is that you must have an established relationship with this person to call them for a business solicitation.”

Since REDX scrubs phone numbers of FSBOs and expired listings against the Do Not Call List, I asked him about how that will impact agents who do cold calling in the future. 

Fenn began by making an important disclaimer: “I’m not an attorney and I’m not your broker. Everybody is interpreting these a little bit differently.”

He then explained, “I think interpreting all these things comes down to your legal counsel and your broker and the risk profile they’re willing to take. I think the most important thing to consider here is to look at what the consumer really wants.” 

Part of the challenge is that there are conflicts within the laws themselves. For example, Fenn said the FTC website says you can call if you’re not soliciting or if you’re doing a survey. 

“Over the last five or six years, there has been an explosion of lead generation companies and the portals have also gotten into the business of selling leads. While there have always been big lead generation companies, the amount that have come up over the last five years has been a massive shift for the industry,” Fenn said.   

“The FCC is now saying that you cannot say to a lead, “‘Hey do you want to be contacted?’ and then go out and sell that lead to 1,000 people.”  

Next-gen real estate agents shift their approach to lead gen 

Fenn described a surprising new trend among younger agents entering the real estate industry. 

“New agents are coming into the business and saying, ‘My lead generation budget is $1,000 per month. Where do I go to buy leads?’” Fenn explained. “That’s totally different from the mindset from the past where people grew their database starting with their family and friends.” 

The impact on the portals and agent teams

Back in Apr. 2022, Zillow started removing agents from its “Premier Agent Program” and shifted to emphasizing their Flex Program. According to the Zillow website, 

“Zillow Premier Agents partners receive connections and leads in a specific geographic area by paying for a share of voice in the ZIP code. Agents enrolled in the Flex program receive connections to home shoppers in their service areas without paying Zillow upfront.”

Here’s the catch with Flex — agents pay 30 to 40 percent referral fees to Zillow for Flex leads when they close. 

Real estate lead generation companies including Zillow, Realtor.com, and others who sell the same lead to more than one person are now facing a massive shift in how they can do business once this rule takes effect in July 2024. 

The problem is not just the FCC and FTC Rules, however. 

“Gmail now has new rules that that went into effect February 2023, and the same with Yahoo,” Fenn said. 

“They’re saying we don’t want you to email a person who doesn’t want to get your email. The whole idea is you must have a relationship with the person you want to communicate with.” 

Stop renting your lead generation funnel and own it instead

Given all these new regulations, many of which have been driven by consumer complaints, Fenn had this important takeaway for how agents should approach their lead generation in the future: 

“You can no longer rent somebody else’s lead generation funnel. You’ve got to start owning your own funnel because that’s how you build a relationship, not by using a generic ad that says, ‘Check out your home value,’” Fenn said. 

Rather than working with cold contacts, Fenn urged agents to focus on creating warm prospects where the person you’re reaching out to knows you.

The biggest impact of ‘written consent’ will be on agent teams

Fenn had an interesting take on how this will impact both the portals and especially agent teams. 

“New agents are routinely advised to join an agent team that will generate leads for them. The written consent rule is going to make this much more difficult since both portals and teams must obtain permission to communicate with someone where they don’t have a pre-existing relationship,” Fenn said. 

For decades, the typical number of transactions conducted in residential real estate has hovered around five million, or 10 million sides. In 2023, it fell to about 4.1 million transactions or about 8.2 million sides. 

Fenn then shared a stat a speaker gave at a recent conference (which he hadn’t verified) claiming that 2023 with 4.1 million transactions, four billion leads were sold. 

This can become a major problem for agent team leaders who often spend massive amounts of money with lead generation companies in order to provide leads for their team members. 

“If a team is getting their leads from a third-party lead provider, the new written consent law may mean way fewer leads for their team,” Fenn said. His advice is to: 

“Develop a referral-based business by working with past clients and your sphere. The nice thing about doing that is you can call or text message them and you don’t have to worry. That’s the advantage of owning your own funnel.” 

Additional workarounds

Direct mail, door knocking, and open houses are still viable options. You can also reach out to others including owners of expired listings, but your strategy needs to shift dramatically. 

When I was training back in Los Angeles, several of our most creative agents would overnight or hand deliver a very detailed CMA to owners of expired listings plus a detailed marketing plan. The approach was pricey, but effective. 

A different workaround is to use Facebook Messenger or LinkedIn messaging. To the best of my knowledge, you can only use these once unless the person you contact agrees to your friend request or LinkedIn invite. 

In terms of what to send them, my recommendation is that you create an “Equity Check Up,” (as opposed to a CMA which is what almost all other agents use). The Equity Check Up includes your CMA along with one of the detailed property reports from NARRPR.com (Realtors Property Resource, a free service from NAR for their realtor members.) 

In your direct message, you can reference that you have put together a 25-page (however long our CMA and the RPR report is) Equity Check Up for their home. If they’re interested, ask if they would prefer to receive a link via text or email. At that point, you now have a warm lead that you can contact because they asked you to send the report and gave you their contact information.  

This is an example of how to work in this new environment using “Give-to-get-marketing” or “attraction-based selling.”  

‘Fishing’ replaces ‘hunting’ and ‘farming’

Fenn describes “fishing” as an approach where you make an offer of service (the bait, e.g., Equity Checkup) and ask if the person would like to receive it. You can also use a “fishing/attraction” offer in your print farming materials. 

A proven strategy to maximize the response and convert more leads is to use a QR code. When someone scans the QR code, you will immediately receive their contact information. Even more importantly, that person obtains the information they requested in just seconds.  

Creating custom audiences on Facebook and Instagram

Based upon what Fenn’s most successful agents are doing to generate leads, Fenn recommended that agents who have large databases (or want to create them with the tools his company provides) work with Facebook and Instagram’s “custom audience tools.” To use these tools, you must have a specific audience of at least 1,000 people. 

According to Meta, “A custom audience is an ad targeting option that lets you find your existing audiences among people across Meta technologies. You can use sources like customer lists, website or app traffic, or engagement across Meta technologies to create custom audiences of people who already know your business.”

Shopify has a detailed Beginner’s Guide that describes the steps required to do this. 

Fenn shared the following example of how you can boost a video that is popular with your contacts or other content and share it with a custom audience for about $2.00 per day. 

“Let me give you a scenario from one of our customers who was doing an open house where she reached 1,000 homeowners near where the open house would be held.  She boosted a video of her in front of the house as well as local landmarks,” Fenn said. 

“So, people are seeing her video over and over. The result was when these people met the agent at the open house, she kept hearing, ‘I know you don’t know me, but I feel like I know you from you from your business,’ or ‘Wow, you really do a lot of real estate business here.’ At that point, you have a warm lead that you can contact.”

Fenn’s final piece of advice

Given that business is always changing, Fenn strongly urged agents to stop renting their lead generation funnel and work on generating their own leads, starting with past clients and their sphere. In this new environment, attraction is the name of the game. If you’re not already using “fishing” and attraction strategies, the time to integrate these approaches into your business is now.