In real estate, it’s essential to generate leads and bring in new business. But, as they say, there’s many ways to skin a cat. Many agents are familiar with paid leads, and they’re a practical way to keep your pipeline full — especially if you’re new to an area or looking to scale up quickly. Yet, as recent headlines have shown, you need to be cautious when choosing a paid lead source. Let’s dive into what paid leads actually are, why they’re useful, and tips to choose the right paid lead partner.

What Are Paid Leads? (And Why Are They Useful?)

Paid leads are essentially potential clients whose contact information is sold to agents, usually gathered by third-party companies. These services promise that, for a certain fee, they’ll connect you with people looking to buy or sell a home. Many agents, especially those new to real estate or working in highly competitive markets, turn to paid leads as a fast way to build up their client pipeline.

However, a recent lawsuit has raised questions about the legitimacy of some lead providers’ practices. The class-action suit against Move Inc., which owns Realtor.com and OpCity, alleges that the company misled agents by bundling irrelevant or even fake consumer data and selling it as leads. According to the agents involved in the suit, these “leads” often included individuals who had no intention of buying or selling a property, undermining agents’ business efforts and wasting their resources. Furthermore, the agents claim that Move Inc. manipulated contractual terms without proper notification, making it difficult for agents to exit ineffective lead-generation agreements.

This legal dispute has sparked industry-wide concerns about the transparency and value of paid lead systems. The agents argue that these practices misrepresented the quality of the leads they received, leading them to question whether purchasing leads is a worthwhile investment.

Paid Leads vs Paid Lead Generation

Before we get stuck into paid leads, let’s look at an alternative – paid lead generation. As an alternative to simply buying leads, agents can also invest in active marketing efforts aimed at drawing clients through targeted advertising. Some popular paid lead generation strategies include:

• Online Ads: Using platforms like Google Ads or social media to create pay-per-click (PPC) campaigns that attract prospective buyers and sellers.
• Sponsored Content: Publishing paid posts on social media or through content partnerships that appeal to a specific audience, such as first-time homebuyers or luxury clients.
• Retargeting Ads: Display ads that reach people who have visited your website or interacted with your brand, keeping your services top of mind.
• Custom Landing Pages: Designing tailored landing pages and lead forms that collect client contact information in exchange for valuable resources (e.g., a neighborhood guide).

By attracting leads directly, agents can often reach prospects who are already interested in their services. Paid lead generation also gives an agent control over the lead’s first impression of their business, and gives an agent a bit of leeway in how they choose to engage with leads. It’s a good compromise between buying instant paid leads and investing in organic lead generation, which takes a long-term, holistic effort.

Types of Paid Leads

Returning to the topic of paid leads – as the case with Move Inc demonstrates, not all paid leads are created equal. Understanding the differences can help agents choose the right approach for their need, so here are some common types of paid leads to consider:

• Exclusive Leads: These leads are provided to one agent only, reducing competition and typically resulting in higher conversion rates, but they come at a higher cost.
• Shared Leads: These leads are sold to multiple agents, creating competition but often at a lower price, making them a more affordable option.
• Real-Time Leads: Delivered immediately after a potential client shows interest, real-time leads can be more effective because agents can reach out promptly while interest is high.
• Aged Leads: These are leads that were generated days or even weeks earlier. They’re usually less expensive but might be harder to convert as the potential client’s intent could have faded.

Choosing the right type depends on your budget, market conditions, and client needs. 

Finding a Paid Lead Service You Can Trust

As we’ve discussed, choosing a reputable provider is essential for agents who want to get the most value from their paid leads. Here are some criteria to consider:

• Transparency in Lead Sourcing: Reputable companies clearly explain how they source and qualify leads. Look for providers that openly discuss their process so you know the leads you’re paying for are genuinely interested in buying or selling real estate.
• Track Record and Positive Reviews: Look for companies with strong reputations and client testimonials. Positive feedback from other agents can provide insights into lead quality and customer service, and may reveal red flags like unvetted or outdated leads.
• Quality Over Quantity: It’s usually better to receive fewer, high-quality leads than a large volume of unfiltered contacts. Look for services that allow you to specify parameters like location, budget range, and property type to ensure better alignment with your ideal client base.
• Data Privacy and Security: Since lead generation services handle personal information, they should meet high standards for data protection. Choose companies that adhere to privacy laws to safeguard your clients’ information and preserve your professional reputation.

Maximizing the Value of Purchased Leads

Even with an excellent source of paid leads, you need to put in the work once you have them in hand. Here are strategies for getting the most from your purchased leads:

• Respond Quickly: Studies show that response time can significantly impact conversion. Aim to reach out to leads within minutes to establish a strong first impression and increase engagement.
• Qualify Leads Promptly: Quickly assess each lead’s level of interest to prioritize time and resources on the most promising prospects, avoiding wasted effort on lower-quality leads.
• Consistent Follow-Up: Many leads may need time to make a decision, so plan for multiple follow-ups to keep your services top of mind and increase the chance of conversion.

Evaluating Return on Investment (ROI) on Paid Leads

Lastly, it’s essential to monitor and evaluate ROI to track how effective your investment is.  Here are a few best practices:

• Track Key Metrics: Keep an eye on conversion rates, cost per lead, and the number of leads that result in actual clients.
• Analyze Lead Quality: Look beyond the number of leads received and evaluate the quality of each one. Are the leads likely to convert into actual clients?
• Adjust Your Strategy: Regularly analyze your paid leads’ performance and adjust your budget, lead types, or providers based on what yields the best results.

By keeping track of all these factors and taking a strategic approach to using paid leads, you’ll be able to make an informed decision when reviewing the most successful ways to fill your pipeline.