This article is part of a larger series on How to Become a Real Estate Agent.
Recent lead generation statistics show that digital marketing methods are increasingly common and are an effective means of reaching clients with a positive return on investment (ROI). However, many tried-and-true tactics, like one-on-one conversations and referrals, are still powerful tools. Before implementing your lead generation strategies, here are the most critical real estate lead generation statistics you need to know to improve and enhance your tactics in the ever-changing marketing landscape.
General Real Estate Lead Generation Statistics
All real estate agents and brokers should have strategies for lead generation as part of their business plan. Educating yourself on general real estate stats will help formulate your strategy and guarantee that you’re making decisions based on success rates and targeting the correct audience.
1. 53% of agents spend $0 to $250 monthly on lead generation
Within the last 12 months, 29% of surveyed realtors had spent less than $50 per month on real estate lead generation. The next highest group reflected 24% of realtors spending between $50 and $250 per month over the last year. This data shows that the average agent spent of $0 to $250 per month on generation efforts.
On average, real estate agents spend a modest amount of money on lead generation. This suggests that many agents choose free and low-cost strategies to find new leads instead of using a more costly lead generation tool or strategy that may provide bigger opportunities. While it is possible for agents to generate leads for under $50 through free methods like referrals and social media marketing, many paid lead generation methods tend to be $100 or more, and guarantee a certain amount of leads per month.
Read our article Eight Best Places to Buy Real Estate Leads in 2022 for paid options at various price points.
2. Referrals (59%) are the largest source of foreign real estate leads
Approximately one out of four real estate buyers from other countries found their agent through a personal referral. Notably, the second-largest source was personal contact at 22%, and the third-largest, at 14% of buyers, were repeat buyers.
A total of 59% (23% referrals, 22% personal contacts, and 14% former clients) of foreign real estate buyers found an agent through in-person meetings and relationships, while only 30% used more typical marketing methods like organic search, digital ads, open houses, and signs.
When generating and nurturing foreign real estate leads, in-person marketing methods have a clear advantage over digital marketing efforts.
3. 47% of homebuyers used an agent recommended to them
Of all the ways that potential buyers can find a real estate agent, 47% of them used an agent who was personally recommended to them by a friend, neighbor, or family member. This shows that in an increasingly digital market, real estate is still heavily dependent on relationships, reputation, and networking.
As you grow your personal network, be sure that you are aware and knowledgeable about real estate laws and restrictions. An agent can easily and unintentionally violate a law just by being unaware. A simple question from clients like “Is this a safe neighborhood?” can lead to a violation of the Fair Housing Act, and real estate referrals handled incorrectly can be a RESPA violation. Make sure you learn what each law says and how to protect yourself and your clients.
A large portion of homebuyers prefer working with an agent who comes from a personal recommendation, but additional generation and marketing channels, like organic search and paid ads, generate a similar number of new leads and serve to build trust with referrals. Take a look at our 35 examples of effective and creative real estate ads for inspiration.
4. 68% of sellers found their agent through referrals or previous transactions
Most sellers have already participated in at least one real estate transaction, while many buyers are participating for the first time. Therefore, many homesellers have worked with an agent in the past, making them more likely to become repeat clients or sources of referrals. This is likely why 68% of sellers find their agent through one of those two sources.
Real estate statistics show that 53% of homesellers used the same agent to buy and sell their home—plus, that number rises to 85% for sellers who bought a new home within 10 miles of the original home.
This clearly displays how each of your clients is a valuable source of future lead generation and sales. Not only do your previous buyer clients have the ability to recommend you to others, but they are also more likely to work with you on multiple transactions.
The most powerful method of generating homeseller leads is through personal referrals and sphere of influence (SOI) marketing to previous clients.
5. 73% of buyers & 82% of sellers only contacted one real estate agent
It’s recommended that homebuyers and homeowners meet with multiple real estate agents before starting their transaction, but real estate lead generation statistics show that this is not typically what happens. In reality, 73% of buyers interviewed only one agent, and 82% of sellers worked with the first agent they contacted.
With such a large majority of buyers and sellers choosing the first agent they meet, it shows that your first impression—regardless of whether it’s online or in-person—is key to closing a deal. Consider this as you create and implement real estate lead generation and marketing strategies.
Since most homebuyers and homesellers don’t interview more than one agent, you have the highest chance of converting a potential client if you meet them before other agents. Evaluate the kind of impression your online and in-person presence makes on potential leads, and adjust them as necessary so you can be the first (and last) agent that both buyers and sellers reach out to.
6. 89% of homebuyers would recommend their real estate agent
Even though buying a house is a complicated process that often presents many unknown challenges, about nine out of 10 buyers in 2022 said that they would happily work with their real estate agent again or recommend them to others.
However, the National Association of Realtors (NAR) also reported that only 13% of buyers and sellers actually did work with their agents again when the opportunity arrived.
These statistics clearly show that the vast majority of realtors are serving their clients well during a transaction, but they’re missing out on valuable opportunities for repeat clients. A large part of this gap could be because agents don’t realize how easily their previous clients could lead to new business. On the other hand, it’s extremely difficult to remember to keep in touch with every client on your own—that’s why customer relationship managers (CRMs) are so vital to growing real estate business.
Most homebuyers would happily refer their agents to their friends and family, but many agents don’t consistently ask for referrals. As a result, only a small number of clients actually do provide referrals or work with their original agent again. Consider sending a client gift to encourage referral. Read our list of ideas in 30 Fun Pop-by Ideas: Small Gifts for Your Real Estate Clients.
The best real estate CRMs keep your contacts organized with pipelines and notes, and allow you to schedule and automate follow-up messages at specific times. LionDesk, a real estate CRM, even connects your contacts to a transaction management tool to streamline communication with clients before, during, and after their transactions. Try LionDesk free for 30 days.
Challenges of Generating Leads
Lead generation is arguably the most important element of any real estate career, but unfortunately, it doesn’t come easily. In fact, generating quality leads presents a variety of challenges for real estate agents and marketers. It’s important to understand the biggest difficulties that agents experience when generating leads in order to create solutions for your business.
7. About 37% of marketers struggle the most with generating high-quality leads
Out of all the challenges that come with generating leads, 37.1% of professionals in a variety of industries noted that consistently getting new, high-quality leads was the most difficult. Other notable difficulties were calculating return on investment (ROI), reaching the right audience, understanding lead quality, and determining the right marketing channels.
Once you become a real estate agent, it will take time to learn about your audience and how to most successfully reach them. There are an endless number of options to find, generate, and nurture leads, but this data shows that it is not a black-and-white or plug-and-play tactic.
Learning how to generate high-quality leads is challenging for real estate agents of all skill levels, so expect to invest your time, energy, and finances into various strategies before finding success. This process is vital to building a successful and long-term business. Read our tips and tricks on the top 15 ways to generate real estate leads to discover strategies that can work for you.
8. Most difficult factor of lead generation: conveying your value as a real estate agent
In a 2021 survey of U.S. marketing decision-makers, 35.4% said that the most difficult factor in generating quality leads is buyers misunderstanding the value of the offering. In addition, 25.6% of marketers reported challenges with their audience being unaware of their services, and another 25.3% noted that one-on-one outreach methods aren’t scalable.
Previous real estate lead generation statistics show that first impressions are a vital part of an agent’s ability to close new clients and sales, but it can be difficult to communicate your entire offer online or the first time you meet someone in-person. In fact, if you don’t already have a clear understanding of your own unique selling proposition (USP), then it will be downright impossible.
On the other hand, it’s not feasible or effective to spend all your time reaching out individually to potential clients and having drawn-out conversations about what sets you apart. With a clear USP, clarify your audience and your offer in a concise way and implement marketing strategies that appeal to your ideal clients. For example, instead of introducing yourself as a real estate agent, a clear USP might help you identify that you are an education-focused agent who helps buyers and sellers get the maximum profit out of their homes.
Your ability to communicate your service and your value to potential leads will define your ability to consistently generate new leads who are likely to convert into sales. Learn how to create a successful real estate elevator pitch that can properly tell clients about your value as an agent.
Most Effective Lead Generation Strategies
With such an abundance of possible lead generation strategies, it can be tempting for agents to only focus on the strategies that seem easiest or are more comfortable to them. However, it’s necessary to be aware of what strategies are the most effective in the industry and actually move the needle to help agents find new leads and clients.
9. 52% of realtors say social media is the top tech tool for generating leads
In a list of top real estate tech tools, including personal websites, email marketing, and the multiple listing service (MLS), a massive 52% of realtors noted that social media was the best source of high-quality real estate leads.
The second-highest rated tool, customer relationship manager (CRM), was only rated by 31% of participants. This data shows that social media is not a short-term marketing a lead generation fad that will fade over time, but is actually increasing in effectiveness over time.
Social media is no longer just a lead generation option—it is now a necessary marketing element for every agent. It provides an incredibly powerful and effective method of targeting prospective clients, building rapport, and growing your real estate brand, and is expected by the majority of buyers and sellers. To learn more about how to maximize your social media strategies, review our article 15 Ways to Crush Your Real Estate Social Media Marketing.
10. 90% of realtors use Facebook to generate leads
The most-used social platform, at a whopping 90%, is Facebook. Realtors use it for marketing their business and connecting with clients. The next-highest social media platforms were Instagram and LinkedIn, which are still used by a majority of agents. Keep in mind that social media is ever-changing, so it’s wise not to depend on a single platform for the bulk of your marketing and lead generation.
The heavy use of Facebook is a sign that many potential real estate clients in every area of the U.S. are active on this platform.
Facebook is a great place for agents to begin marketing and posting on social media, presenting clear avenues to connect with local buyers and repurposing every type of content from other platforms. If you need support to start marketing on Facebook, read the top ways to general real estate leads on Facebook.
11. 40% of marketers note the importance of individual outreach
When real estate professionals think about the most effective methods of generating quality leads that result in sales, the number one method was one-to-one outreach at 40.6%. Closely following, 37.6% noted that the key to their success came from addressing their client’s challenges head-on. Notably, brand visibility and paid media campaigns were also highly rated as important factors for lead generation success.
These notable numbers reflect that relationships are still key to real estate success. Digital marketing methods are highly effective, but the biggest results came from genuine, personal connections.
One-on-one outreach is considered the most effective way of generating and converting new leads. In an increasingly digital industry, it’s necessary for realtors to build a brand and reputation online without losing the ability or habit of connecting individually with leads.
12. Zillow is the most popular real estate website: 36 million monthly visits
As of October 2021, Zillow had a significant lead on all other real estate platforms with 36 million unique monthly visits. The second-highest real estate platform was Trulia, which is owned by Zillow. This is extremely important information for real estate professionals, especially since Zillow provides opportunities for real estate agents to take advantage of this traffic for their business as a Zillow Premier Agent.
When compared to every other marketing tool, online real estate platforms generate the highest amount of traffic. Successful agents should consider how they can leverage the massive popularity of platforms like Zillow and Trulia to grow their business more efficiently. Read our Zillow Premier Agent review to learn more.
Since Zillow is a pillar of the modern real estate world as well as a real estate lead generation tool for agents, consider becoming a Premier Agent. Leveraging existing Zillow traffic into quality leads is a powerful way to grow your business. In addition, by being a Premier Agent, you can post your listings on Zillow or be featured on other listings to draw in potential buyer leads.
Real Estate Lead Conversion Statistics
Generating real estate leads is the first part of the process of gaining new leads, but they actually need to convert into clients in order to grow your business. It’s important to recognize that every lead generation strategy has different levels of effectiveness, so you must have a general understanding of what to expect and what to look for as you implement new methods and gain new clients.
13. The average conversion rate in real estate is 1.7%
Overall, real estate lead conversion statistics range from 0% to 12%, with only the highest-performing real estate agents generating conversion rates over 10%. Overall, the conversion rate for the real estate industry is 1.7%. Real estate transactions are one of the biggest financial decisions and processes that your clients make, so the process of building trust and forming relationships is particularly important and time-consuming.
Although the average conversion rates in the real estate industry appear low, larger transactions typically have a longer nurturing process. However, conversion rates between agents can range from 0% to 12%, so it’s important to test different methods and strategies to find what is most effective for your audience.
14. Organic search provides the highest conversion rates at 3.2%
A few of the most commonly effective methods of both generating and nurturing leads are organic search, paid ads, emails, and referrals. Organic search traffic leads to the highest conversion rates at 3.2%, followed by direct contact at 1.8%.
Keep in mind that the real estate industry is highly seasonal. Most agents know the best and worst times to buy a house, so it’s logical that there are also better and worse times to market through various channels. For instance, digital ads targeting homebuyers may perform well during peak seasons, but using direct mail during the holiday season may be more effective.
Even if a common lead generation and nurturing strategy works for someone else, it doesn’t mean it will work for you and your target audience. Don’t assume that a popular method of growing your business will work for you. Make sure you gather all the data about your niche clientele and make adjustments to your strategy in order to maximize conversions.
15. 61.7% of buyers that search online convert over the phone
Within each lead generation strategy, there are additional tools and strategies that will impact your results. Organic search and paid ads drive 57% of all website visitors, but only a small percentage of visitors translate into leads or clients.
In fact, an interesting study found that 61.7% of homebuyers who searched online ended up becoming clients over the phone—quite an increase from the average conversion rate of organic search alone (3.2%). It’s clear that a personal, one-on-one connection in combination with search engine optimization (SEO) is much more effective than either method individually.
A complete marketing strategy will be significantly more effective than an individual lead generation strategy or tool on its own. When you combine multiple strategies like organic search and one-on-one phone calls, you can multiply conversion rates by 20 times. Download our Real Estate Marketing Plan Template and Strategy Guide to get started today.
Return on Investment (ROI) for Lead Generation
As you invest in real estate lead generation, it’s important to evaluate your spending and your profits in order to maintain and increase profitability as you grow. However, you will find that calculating exact ROI is difficult since there are an unlimited number of factors that affect the ROI of every lead generation channel and each agent’s business. Although there is limited data about ROI, it’s still important to learn how you generate a profit as well as what works for other agents.
16. Referred clients have a higher lifetime value by 16%
Clients who find a real estate agent on their own have the potential to become repeat customers and provide future referrals. However, when a new client is referred by someone they trust, the likelihood of them becoming a loyal customer and generating higher profits increases by approximately 16%.
Real estate referrals are valuable for closing sales, but they are also the most likely to become loyal, long-term customers. They will also take less effort to convert into clients if they are referred by a trusted friend, family member, or colleague. For these reasons, referred leads and clients are more valuable over time than leads from other sources.
17. 21% of realtors receive more than half their business through referrals
Real estate referrals are widely acknowledged as one of the most important pieces of a successful business, even though a few real estate lead conversion statistics above show that they do not drive the highest conversion rates. However, additional research on referrals shows many other reasons why they are so tied with successful real estate businesses.
Since referred clients are typically more profitable, these leads tend to compound more quickly. As a result, about 21% of realtors receive more than half of their new clients through referrals. This further contributes to their success because it minimizes the time and money spent on lead generation, nurturing, and building rapport.
Because of the various benefits of receiving real estate referrals, it’s common for successful real estate agents to generate a majority of their income from referrals alone. However, building a business on referrals requires a strong referral lead generation strategy.
Generating leads for your real estate business is essential to earning money and growing your business. There are various ways to successfully generate, nurture, and convert leads, like social media, organic search, referrals, and networking. While there is no cut-and-dry method to grow your business or know exactly what will work best for your audience, you should use real estate lead generation statistics to inform your decisions and help you find success more quickly.