value of real estate leadsIn 2019, the average realtor made around $40,000.

Although this varies depending on realtors and where they live, it still shows how many realtors struggle to make a luxurious income. They struggle to sell more than enough homes.

That’s why realtors need to understand the value of real estate leads. The more they understand these leads and nurture them, the more likely they make a sale.

But how do you calculate the value of real estate leads?

Here’s a guide that can shape your understanding of real estate leads and show you how you should value them.

What Is a Real Estate Lead?

When it comes to real estate leads, you need to figure out the best way to produce sales from these leads. But first, you need to know what a lead is.

A lead is someone who has shown interest in your business, which is real estate. Someone is interested in buying or selling property. They may also be interested in investing in property.

You can accumulate leads with your website by having a lead form on your website. This may involve a contact form or a lead magnet. This is when someone gives you their information in exchange for insightful information, such as a guide.

When you have a lead, you need to assess where they in your funnel. You have to figure out if they are a cold or warm lead.

A cold lead is someone who has no idea what it takes to buy or sell property, and they aren’t ready to buy or sell a property for months.

Warm leads are people who are ready to buy, sell, or invest immediately. They are ready to hop on a call and complete a transaction.

This is why it’s important to assess your leads’ value and where they are in your funnel. The more you know about your leads, especially where they are in the funnel, the more you can help them. You can nurture them until they are ready to buy, sell, or invest.

How Do You Calculate the Value of Real Estate Leads?

Now that you know what leads are, how do you calculate the value of a lead?

All you have to do is remember a simple equation: average commission x conversion rate = lead value.

1. What Is the Average Commission? 

The average commission is what you would make during a typically closed transaction. You need to assess how much you are making each year, which helps you figure out how much you are making on average.

2. What’s Your Conversion Rate?

The conversion rate is how many leads you are converting into a sale. If you take 25 leads out of a 100 and convert a transaction, your conversion rate is 25%.

You should know what the average conversion rate is among realtors and figure out strategies that can help you improve this conversion. That’s why you should know about cold and warm leads.

The more you know about your leads, the more you can help them, which results in more sales.

Here’s An Example:

If you made $45,000 a year on average from a closed transaction and closed 1 out of 25 leads, you would follow this mathematical equation to evaluate each lead.

$45,000 x 4% (1 out of 25) = $1800.

So each lead is worth $1800. Every time you convert a lead, this is what you would earn.

This can help give you perspective on how much you’re earning per year. It can also give you insight on how many leads you need to convert to make over $100,000 in commissions.

For example, if you want to make $10k a month, you would need to close at least 6 leads a month. You can either do this by producing more leads or improving the quality of your leads.

Here’s some more insight on how to produce more leads

How Do You Produce More Leads?

You can either increase the number of sales you make per month by increasing the number of leads you accumulate each month. More leads would result in more sales. It becomes a numbers game.

Another way to improve the value of your leads is to improve your conversion rate. This is when you focus on the quality of how you interact with your leads. You are more focused on sales rather than playing the numbers game.

One way to increase your conversion rate and the number of leads you have is to make sure your website is optimized. The better your website is, the more likely someone will stay on your website and become a lead.

You can also A/B test different headlines and body copy on your website. This allows you to optimize and see what’s converting more traffic.

The overall goal if you want to produce more leads is to provide quality content. This will give your ideal market a reason to become a lead.

Now You Know How to Make More Sales as a Realtor

Learning how to calculate the value of real estate leads is critically important if you want to know how to bring in more leads and convert them.

You need to know the math involved and see what each lead is so important. That’s why you have to treat each lead with unique attention. You need to show them the value of your business and build a relationship with them, eventually helping you produce more transactions.

If you want help with your real estate marketing strategy, you can contact us here.

Do you want to get more targeted website traffic? Download the Realtor’s Guide to Building Targeted Website Traffic Checklist here.