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December 10th, 2020

Pay Now or Pay Later:
Should You Pay For Leads Upfront Or At Closing?

When it comes to real estate, there are two philosophies when it comes to paying for leads: paying up front for leads and paying at closing. There are a few factors to consider when determining which is right for you. While there are benefits to paying for leads at closing; no out of pocket costs, and exclusive leads to name the top two, paying for leads upfront can be a less expensive, more lucrative option. Read more about the pros and cons of each below.

Pros of Pay Per Lead:

4X Cheaper

There’s an up front risk not often associated with referral based leads, but the reality is that the cost is often significantly cheaper to buy leads outright. We get it, it takes money to make money, and to pay for leads upfront, you have to have the funds to do so. Using Leader, your cost per lead is exponentially cheaper, historically ranging between $400-$600. Referral fees can eat up a large chunk of your commission check, ranging from anywhere between 25-50%. If you sell a $300,000 home, your commission check should be around $9,000. After a backend referral fee at 30%, that’s one third of your commission check already gone. Keep the entire commission for yourself, and pay for leads upfront.

Own Your Business

Not only does it make more financial sense to buy your leads outright, but it leads to more ownership for your business. Leader works with you to set up the best ad strategy for you and your market. Pay upfront leads better build your pipeline and bring more deals to you down the road. An added bonus of paying for leads up front? A more genuine connection with your clients. Since you’ve already paid for the lead, you may feel more accountable to work the lead so you can pocket your entire commission check. A happy customer is the best referral, so pay up front, put in the work, and make it a memorable, pleasant experience for all parties.

Personalized Ad Campaigns and Messaging

Paying upfront for leads allows you to control the messaging and the campaigns you launch. You can determine the audience you target, the search parameters, and the home values to ensure maximum return. If you work within any sort of niche space, Leader® will help create a custom campaign to target your ideal market. 

Pros of Pay at Closing: 

No Up Front Money Required

There are times when it makes the most financial sense to pay for leads at closing. If money is extremely tight and there really isn't a budget for lead generation, it may be worthwhile to check into pay at close leads. Remember, however, that the cost of paying at closing is a ding to your commission check. If you find yourself short on upfront capital, try looking into some options in addition to online lead generation to get cash flow going. Work over your sphere, invest more time into past clients, cold call, and of course, make your presence known in your community.

Easy Add-On For Already Thriving Business

Are you a top producer already? Pay at closing leads are often a nice solution for agents with full schedules, since you have the flexibility to take on the leads as you see fit. Because of that, you’re not expected to scale your business as much as pay up front leads. Pay at close can be great for agents that are not as concerned about the margin of each deal. Yes, the leads may be more expensive to get to close overall, but when your business is hitting or exceeding goals, it can be extremely helpful to take on an extra deal here and there even with a hit to the margins.
There are times when it’s best to pay at close for leads, and times when it makes more sense to pay for leads upfront. Use this list comparing pros and cons of each to help you decide the option best for you and your business. 
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Looking to generate high-quality leads in your pipeline? We generate high-quality leads for real estate agents and lenders across the country, and we’re happy to help generate quality leads for you. 

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