Sorted 140 leads by source. One source is embarrassing the rest.

Every deal that comes in gets underwritten by me, so I have a clean record of where the last 140 leads came from and what happened to each one. Ran the year end cut this week and the result is uncomfortable enough that I want someone to poke at it.

Four sources. My own direct mail, 71 leads, 3 under contract, 2 closed. Agent relationships, 38 leads, 4 closed, but every one of those was listed and priced accordingly. A wholesaler list I'm on, 22 leads, 0 closed, and I've stopped opening the emails. And one bird dog I pay $600 on delivery plus $2,000 at close, 9 leads, 3 closed.

So the bird dog is 6% of lead volume and 33% of my closings. Cost to me last year was $5,400 in delivery fees plus $6,000 in close fees, $11,400 total, against direct mail that cost about $19,000 for two closings.

The obvious move is to give him more money and ask for more volume. What stops me is that 9 leads is a tiny sample, and I can construct a story where those three closings were luck. Two of them came from the same street, which makes me think he found one situation and worked the neighbors, which is smart and possibly non-repeatable.

He's also told me he'd take a $2,000 a month retainer for priority. That converts my best variable cost into a fixed one, and if his hit rate reverts to something normal I'm paying $24,000 a year for what might be four leads.

What I'm weighing is whether to offer the retainer, raise the delivery fee to $900 and stay variable, or just ask him to tell me honestly how he found those three and decide after.

1 reply

1priya_n21PO1C

I'd ask him. Not as a test, just because the answer is the whole thing you're trying to buy.

If he says he saw an estate situation and knocked on six doors around it, that's a method and methods repeat. If he says a friend of his cousin mentioned something, that's luck with a friendly face and you shouldn't pay $24,000 a year for it.

The part I'd push on is the two houses on one street. That either makes the sample worse, because it's really two events rather than three, or it makes it better, because working a block around a distressed house is a deliberate technique and he already knows to do it. Same fact, opposite conclusions, and only he can tell you which.

Sorted 140 leads by source. One source is embarrassing the rest.

1 reply