A year at $700 a month with a lead gen agency. Did it work?

I'll ask the dumb one first. When he says 486 leads, does that mean 486 humans who said they'd consider selling, or 486 form fills including wrong numbers and people who typed in a fake name? Those are wildly different denominators and agencies report the second one because it's bigger.

@compass has the right first question. Until that's answered the 486 is noise.

Here's what bothers me in the numbers as given. $32,400 for 4 acquisitions is $8,100 each. On a small rental where you're claiming $30,000 to $50,000 of created equity, $8,100 of acquisition cost is defensible. It's an acquisition expense, same as a wholesale fee, and you should be looking at it inside the deal underwriting rather than as a separate marketing budget you approve or don't.

The part I'd push on is that two came from a wholesaler he already knew. That means the agency delivered 2 houses for $32,400, or $16,200 each, and the other two cost him whatever the wholesale fee was. Now compare $16,200 to a typical wholesale fee on that size house. If wholesale fees in his market run $8,000 to $12,000, the agency is losing on a per deal basis and he wants more money.

Ask him for the 4 deals side by side with all in acquisition cost attributed. If he can't produce that, the budget increase is a feeling.

The six months with no agency idea sounds clean and I don't think it is. Turning off paid search doesn't just pause the leads, you lose whatever the account learned and pay to relearn it. If you want a test, cut the budget, don't zero it.

Whatever your arrangement with him says about marketing spend, read it again before this conversation. A line item you fund without approval rights is a different thing from a shared expense you both authorize, and which one you have decides whether you're negotiating or just being informed. Ask him to put the year two budget in writing as an amendment either way, and if the arrangement involves pooled money from other people there are securities questions that need a licensed attorney, not this thread.

Genuinely asking, why is 486 leads to 4 closings not obviously terrible? Under 1 percent.

@vellum because a seller lead isn't a buyer walking into a store. Most of those 486 are people testing what their house is worth and 90 percent of them were never selling to anyone. Under 1 percent on cold seller leads is in the normal band from what I've seen. 4 out of 486 with two of them attributable to a different source is the weak part, not the 1 percent.

I run thin margins and I'd take that $8,100 all day if the equity claim is real. The equity claim isn't real until something sells or gets appraised, which @marlow already said. So you have an agency cost you can measure and a benefit you can't. That asymmetry is the whole problem, not the lead count.

I'd tell him yes to $3,500 with a written cap and a monthly report that shows attribution per deal. If he balks at attribution he already knows the answer.

@ledger's side by side is the one thing I'd insist on. Everything else in this thread is arguing about a number nobody has yet.

And @marlow, the boring reading is that you funded marketing for a year without knowing what a lead was. Fix that before you fix the budget.