The Leads Lie

Hey, welcome to Brokers Uncensored, where we talk about real raw real estate. I am here today with Becky Dewey, managing broker for RE/MAX Alliance Group, and Steve Zaras. I'm Shadd Boucher. We have got about 75 years of experience in the real estate industry between us, and we are here to basically break down things as we see it, get into the real estate. And one of the things that we wanted to talk about today, because let's be honest, August is moving month for most agents. They start looking at other places to move their business. Obviously, they're, you know, their business is, is not doing as well as they want, and this is about the month where they start staring at other options. And we wanted to talk today because what we're all hearing is, do you offer leads? And we wanted to talk today about the myths and the truths and why necessarily getting quote-unquote free leads is a big lie. So who wants to start this off?

Becky, you want to start or you want me to start?

Go ahead, Steve.

All right. We've kind of talked about this before. When you're provided leads by a brokerage, you're paying them money for those leads because you're not making as much money per deal, whether you be on a 50/50 split or whatever it might be. And again, it comes down to, well, if you learn how to do it yourself, you can do half the number of deals and make the same money. And if you master it, you'll make a lot more money. So I just again, you know, give a man a fish, feed him for a day. Feed him how to fish, feed him for a lifetime.

Yeah, it's sort of teach him to fish, but whatever.

Yeah, well, you know what I mean.

It's Friday. I think you hit it right on. I think you hit it right on the head, Steve. The the problem with it is is most agents here we give you leads, and where most of them kind of falter is. That should be, that should be the intro to you starting to ask a crapload of questions. Yeah. Right. Where do they come from? How are you getting them? How are they being verified? You know, I, in prep for this, for this podcast this morning, I, I pulled up a bunch of statistics. Realtor.com says that their online leads convert at an average of 1.2%. Yeah, I believe it. Wow. Zillow's around 2%.

Yep.

So that puts you at 25 to 50 leads to get one closing. And all of those, all of these lead generation companies say that if you're not going to follow up a minimum of 6 to 8 times, those leads won't convert at all. So imagine all of this work you're doing. And here's the interesting thing. How do you actually sell real estate when you're glued to your phone? Because that lead you don't answer could have been the million dollars. Yeah, right. And then to Steve's point, you know, Zillow Flex right now, you know, I believe their overhead is 40% that they take on that lead. You know, there's companies out there, there's companies out there that Have on their billboards, you know, we'll get you listing appointments. Oh yeah, they will.

You'll get appointments; you won't get listings.

Yeah, and and if you take the listing and sell it, they keep the lion's share of the commission.

Right.

You know, there's one company out there that we know for a fact that they they they pay their agents thirty-five percent. They keep the rest because they got you an appointment.

That's if they're producing. I don't know who you're talking about.

Correct. That's if they're producing.

Otherwise, you're at 18%.

Oh my goodness.

Correct. So, if you think about it, yeah, they're setting you up on an appointment. In fact, there's one advertisement that they have with one of their agents. I closed 200 deals this year. I started doing the math and I'm like, hmm, that's not good. But I think that's one of the things that agents need to understand. And to Steve's point, You know, teaching you to fish is what our job is, right? That's what all 3 of us are good at.

And Chad, if I could jump in.

Go.

Somebody does 200 deals. First of all, you've got no life. All you do is work. If that's the case, you got to pay somebody as a transaction coordinator. You probably have at least one assistant. So again, you can do half the work and make the same amount of money.

Less than half, I'd argue.

Yes.

Less than— you gotta figure for every 3 of those deals, for every 3 of those deals, that's what most of our agents get paid on a split. So you basically divide $200,000 by 3, which is, is insane.

Yeah.

You know, it's, it's— and like you said, you're working, you're working, you're working. And, you know, I think part of this is the fact that most agents They just, they're so happy to have quote unquote verified leads that they don't ask any of the questions and they just don't want to.

And that's, and we talked a little bit about this last week, is that's a great starting point for somebody who's not in the business or whatever, but it should really be probably, and I don't know, you know, 50% of your business, the other 50% should be you, you lead generating yourself with your sphere of influence and the people you know and love and want, you want to work with. Because it becomes a trap. Because how do you get out from underneath of that?

Yep.

And you have no book of business. If you were to walk away today, you are not going to have a book of business. We mentioned this last week. You, you can't, you know, start farming those people. Those are like locked and loaded to the, to the team or the brokerage that, that you were with before. Um, and it's, it's hard, hard, because I've spoke with members of teams that have— are in this situation, and it's hard for them to get out from underneath of that situation because They, they are like a lost puppy dog when once they do, if they don't, if they can't hop into another team or situation where they have somebody training them to generate leads or maybe another team handing them leads, it's not, it's not a good position to be in.

Well, and imagine this, if, if the statistics that all these people throw out there are correct, 25 to 50 leads to do one closing, what happens when the market shifts and you're not getting 25 leads a month? And there's not enough leads to go around. I mean, you're totally dependent on a handout. So are you an entrepreneur? Are you an employee? Who really controls your business? And, you know, and let's say, you know, let's say that the team lead is super benevolent, right? And he's just handing them out, you know, here, you know, you're the next in line, you get the next lead. But we know that doesn't happen.

No.

We know that doesn't happen. You know, you're gonna get, you know, until you prove yourself, you're gonna get the garbage leads.

Right.

And then go work them. And so, you know, that's one of those things that, you know, when the market shifts and goes down, who's in control of your business? You're not. You know, and to Becky's point, I, I'm— I have a recruit right now, and the one thing that's holding him from coming to us Is he's fighting with his broker to get his, his production from the team shifted under his name. Now, the MLS will do it, but they need a letter from the team lead and the broker, and the team lead isn't wanting to give him that letter.

No, they're not going to do that.

Because then the team lead loses the production.

Yep.

So he's been doing this for 15 years and he might as well be a ghost.

Yes. Right.

He might as well be a ghost, and that's the that's the major problem with all of that is who really controls your business. So you know, is it an answer in the short term? Maybe. You know, is it an answer in the long term? Probably not.

No.

And I don't know if you guys have noticed, like I see some teams that do this, and they're very successful teams, but they're boasting what their buyer's agents volume is.

Yes.

And they're killing it as far as volume goes. They're killing it. They're obviously, you know, they can obviously bring it, bring it to closing. They're great agents, that kind of thing. But at the end of the day, what's their bottom line? What are they actually making? To me, I don't need a plaque on the wall. Give me a check. That's my thought process. A lot of people want the, you know, the glory and the recognition, and that's great too, you know, for your hard work. I get that. But at the end of the day, what is their bottom line and what did they actually take home after they paid Zillow and their team leader and all of this stuff? And it's probably a very small percentage.

Yeah. And let's be honest, when you have that kind of volume and you've got a large split, well, you're still— you're putting that many more miles on your car, that much more gas.

Yep. Your overhead.

Yeah. There's a lot of money in expenses that you have to cover. Uh, so, yes, you're making more money, but you're also spending more money. And maybe you go through a car every 5 years. Uh, now you're going through a car every 3 years, or whatever that works out to be.

Well, I, I just had a conversation with, uh, with an agent that does Cardus relocation, you know, and you guys are all familiar with Cardus relocation. They, they, yeah, they give you, they, they give you great appointments. These people have to work with you if they want their package from their corporation. But you take a 47% haircut. Yeah, off the top, he was a $10 million producer and his GCI last year was $61,000.

Yeah.

Holy cow.

It should be 3 times that.

Oh God, yes. And here's the interesting thing, he's afraid, he's afraid that he can't replicate that on his own. I said, are you— you're talking like $3 million in business. I said, you, you have to know enough people to support that. And he's like, I just don't feel confident. I don't feel confident. I'm like, okay, good luck. You're trapped. Yeah, you're completely trapped. And that's, that's what I think a lot of these people, you know, when I look at it, this whole process of giving leads to agents is, is almost like a retention mechanism through fear.

Well, you know what that's going to lead to, Chad? It's going to lead to a broker not paying large splits, and you're basically going to wind up with a W-2 employee at some point because all you're going to be doing is showing people houses, right?

Well, and there's, and there's already, there's already brokerages that, that do that. Yeah, you know, there's already brokerages that do that, you know. And, and I, I just did a deal with a brokerage in December where the buyer was shuffled between 3 separate people. So it was one agent that showed the property It was another agent that wrote the contract and, and negotiated it. And then, then that agent passed it to a TC, and then that TC passed it to a closing agent.

I will say, when I, I had some big teams, that was the— that was probably one of the biggest complaints from the consumer was, is I never even talked to the agent, you know. And that's— I mean, and, and in the mindset of a lot of those large team leaders, they're not incubating those people and building that relationship. They're a number. I mean, they have the opportunity to build a referral network off of the hundreds of transactions they're doing a year to just, just a number. They're like a machine.

And Becky, if I could praise you for a moment, Becky.

Oh, okay.

I know Shad won't, so I'll take it from you.

You said a key word in what you just said, and that is relationship. This is a relationship business. And anything outside of that, you're making a mistake. You've got to develop those relationships. You've got to have repeat business. You've got to have referrals from your customers, your family, and your friends. I don't know. It's probably been over 10 years since I've done a deal with a lead because I stopped paying for leads. They weren't working out. I was spending more than I was making. Didn't make sense for me.

Well, and most people just don't understand that, you know, there's 2 avenues for business in the industry. One's transactional, which is what we're talking about today, and the other is relationship, which we've touched on. Transactional business is absolutely vulnerable to market shift.

Yeah.

It is 100% vulnerable to market shift because you're not in control of the incoming lead flow. And versus you've got a database of relationships, you just got to make more phone calls. You got to talk to them more often. You've got to, you've got to go out there and find more people. So That's it, you know, but you can still have a great year. Yeah. And that's the problem with transactional is, you know, last year we were getting 55 leads a month from Oodleboodle or whoever we're paying for leads. And this year we're getting 7.

Yeah.

And I think some of those companies are really struggling right now, too. So the uncertainty to put all your eggs in one basket is a little scary.

Well, and think about it, you know, there's a lot of, there's a lot of brokerages that I know that, like, you know, to Becky's point, was on paper they look like they're killing it, right? But when you find out what their overhead is to, to get all these incoming leads and all that, they're making less than a, than a $2 million producing agent. And you're like, what is, what is, you know, why, why are we doing this? You know, yeah, you did, you did 1,000 transactions last year. That's amazing.

Right.

But you literally were spending half a million dollars a month to generate that.

Yeah.

What are you doing?

That's exactly true. Yep. So, here's a cool story I'll tell you, you know, because things kind of evolve and come together at the same time. So, I've been part of the Buffini and Company program and mentor for 15 years or more. So, it's interesting because 2 of my agents, and this was not prompted, they both came to me at 2 different times in 2 different offices And they were like, you know what, I'm really not good about tracking this, but I wanted to tell you because I know you always hear the bad stuff. I wanted to tell you the good stuff. 85%. One of them was 85% of my business is repeat and referral business. The other one, she figured out it was like 75%. And I'm like, and at this stage in your career, that's exactly where you want your business to be.

That's right.

And, you know, it's like I tell the agents and I, you know, I'm like, I don't tell you to recommend you half-ass anything, but really, I, I am like a believer in that program. I think it's easy. I think it's non-confrontational. You're dealing with people you already know, love, and have worked with before.

Yep.

So it's not that, you know, fear of the phone of picking up and cold calling someone. And it's a weed and feed situation on your, on your database and that kind of thing. But it's just nurturing them. And it's— and again, it's that relationship. You want these people to be your walking billboard. And that's a cool— and I tell them, you know, if you half-ass it, you're gonna see results. I'm not suggesting that you do that, but— and they've been at it for— I mean, I think the one, my Mark Ross, I think she did it like 13 or 14 years ago.

Yeah.

And she still sticks with it. And she's like my poster child, you know. I'm like, tell us about it, tell us how you did it. And then she hopped on with the coaching with Buffini and Company, and she did. So, I mean, and they both have been consistently following that program. And it's so easy to do. It's not like rocket science. It doesn't suck the life out of you. It doesn't, you know, again, the fear of the phone and I got to make all these cold calls and that kind of thing. It's so easy. It's just getting consistent and doing the process.

And there's— and there you just hit the nail on the head. It's getting consistent. 99% of agents do not have a schedule, do not stick to it, do not wake up at a consistent time in the morning, do not have a process. They're absolutely seat of their pants every day, which is why they want incoming phone calls, because they don't want to actually wake up every morning and do what they need to do. They're, they're basically, they're proactive when they have somebody to work with.

Mm-hmm.

But they're completely reactive when it comes to getting them.

Yeah. And the problem is it needs to be done consistently because they usually only jump on board. They're like, oh my God, my business is lacking. I'm really slow right now. Let me get back on track and let me do it for 60 days. Oh, and then they start seeing results and then that stuff goes by the wayside again. It needs to be consistent so you have a consistent flow, so you have no dip in your business.

Yeah.

And I say that every morning in this business, you are unemployed.

Broke.

Some folks are really unemployed because they don't— they're not, uh, operating under the, uh, let's use the word consistency. Yeah, on a consistency basis. And therefore, they have those peaks and valleys, and sometimes those peaks are getting farther and farther apart.

Yep, they absolutely are. I, I You know, I use the word intentional and proactive, and that's what I, that's what I preach with every single agent. I'm like, well, yeah, you've got it. You've got an intentional and proactive problem. And that's— and like I said, find an agent that will give me a written schedule that they follow on a daily basis, and I'll give you $100.

Yeah.

Because most people just don't. And that's the— and it's funny because I get agents that come to me like, like Becky was saying, my business is off track. What do I do? That's the first place I start with them. Let me see your schedule. Let me see, let me see what you're doing every day.

Right.

Well, I, I have it in my head. Well, then you're screwed.

Yeah.

Because you're—

My recommendation, even it's 1 hour a day, take 1 hour a day. You wake up in the morning, you grab your cup of coffee, you sit at your desk before you open your emails, you start checking your Facebook, your social media, any of that, and you nail down and you do 1 hour's worth of money-making activities and the rest of the day is cake.

Yeah, right.

And you can't get most agents to do that.

No.

You know, you can't get them to follow a plan. And they— let's say, let's say to your analogy, Becky, it's an hour, right? They waste 45 minutes just trying to figure out what they're going to do, right? They're not working from a plan. They're not working from a structure. And versus, you know, I've got an agent here in my one office who beats me into the office every morning, 3 days a week, 7:15. He's on the phone. He's making his expired calls. He makes those calls. And it's interesting, you know, funny joke.

I've got one too. Yeah.

I know exactly how the calls are doing because when he has a bad call, he walks up the hallway and gets a wintergreen Lifesaver, and then he walks back the hallway to his office again. So, I know the morning's going well when I don't see him. And it's, you know, when I see him 3 or 4 times, not so well. Right. He is actually costing me about $1 million a year in wintergreen Lifesavers. You know, hey, it is what it is. Um, in fact, my admin is at the store right now buying more. Um, but, you know, that's one of those things that I think most people don't realize is everybody, everybody in the office, well, how's he doing so well? I said, come here at 7:15 and you'll find out.

I have one of those too. He's a machine. Yeah, machine. He comes in, closes the door, and you don't— you're like, he's in there. And, and then about 1 o'clock, boom, he's out on listing appointments, right? You know, and then you don't see him for the rest of the day.

And that's the same thing this one does. Monday, Wednesday, Friday, he makes his calls. Tuesday, Thursdays, he's on listing appointments that he generated from the calls. Yep, 100%. And, and everybody thinks he's, he's, you know, and he's good, don't get me wrong. His skills are amazing. He's good. He's not magic. No, but everybody else thinks he's basically magic, which is not—

Well, you have to have a particular type of personality to call expireds because number one, Those sellers are already disappointed that their home didn't sell. They're probably upset and mad at realtors in general for whatever reason or another, you know. So I mean, you already have a couple obstacles against you. So that's when you really need to have that type of personality and that, you know, don't take it personal.

You do. But then again, it, it really comes down to it doesn't matter if his personality or script works really well. If he's not consistent with it, it's garbage.

Right. True.

So, yep. All right. So I think in closing, if you're going to move this season, it's great. You know, do what you need to do for your family and your business. But when somebody says they're going to give you leads, you need to start asking questions. Where are they coming from? How are they being nurtured? Who's expected to call them back? What are we paying to do this? What's it costing me to have them? All of these things. You know, I find that generally speaking, there's 2 mindsets in, in agent culture. The one moves their business to save money, the other moves their business to make money.

Yep.

And unfortunately, when they move their business to save money is usually when they find themselves trapped in this, in this quagmire. So anything else you guys would like to end with before we kind of wrap this up?

Nope, that was great. Appreciate it, guys.

Yeah.

Yeah. And I think this is a very critical topic for anybody that's watching this. Uh, you know, you really need to reach out to us and make Maybe have a one-on-one because this, this is important for your career. At the end of the day, uh, you're building your business and this is a very, a very critical part.

Yep.

Great topic, Shad.

Absolutely. I appreciate it, guys. Thank you very much. Hey, you know, if you guys want to leave anything down in the comments below, please like and subscribe. We basically just bring you this content every single week from 3 brokers that have seen it, done it. And we're just trying to basically make sure you guys don't have to trip over the same rocks that we have. And appreciate it, and we will see you next week.