Why Internet Leads Might Be Hurting Your Real Estate Business (and a Better Alternative)

Are internet leads really helping or hurting your real estate business? While internet leads may seem like a necessary part of building a client base, the reality is that they come with many downsides—from low conversion rates to high competition and significant time investment. As a real estate professional, you may find a more effective, relationship-based alternative that not only brings in business but also fosters trust and long-term connections.

This post explores the top six reasons why internet leads might be holding you back and introduces a powerful approach to building a more consistent and referral-based business. Let’s dive in.

1. Low Conversion Rates
One of the biggest challenges with internet leads is the conversion rate. Studies show that real estate internet leads convert at a rate of just 0.4% to 1.2% depending on lead source and follow-up. Even with long-term follow-up strategies, this means that around 96% of online leads may not result in a transaction. That’s a lot of time and money invested for very little return.

2. High Competition and Saturation
Platforms like Zillow and Realtor.com often resell the same leads to multiple agents, creating intense competition. You’re not just following up with one lead; you’re competing against several other agents who have access to that same contact. This high saturation reduces exclusivity and positions you as just another option among many, rather than a trusted advisor.

3. Increasing Costs 
Internet leads can be costly, especially in high-demand areas. The cost per lead from major platforms ranges from $20 to $220, depending on your location. When you consider that it can take over $2,000 in lead costs alone to close a single transaction, internet leads quickly become an expensive—and often inefficient—method for growing your business.

4. Time-Intensive Follow-Up
Research shows that 80% of sales require five or more follow-up calls after the initial contact, yet most agents stop after just two attempts. Additionally, real estate agents spend an average of six to eight hours each week managing internet leads. This time investment could be better spent on more fruitful, relationship-based business development efforts.

5. Unpredictable Pipeline 
A study by RealTrends found that 54% of agents who rely on internet leads feel they cannot consistently depend on them due to fluctuating demand and lead quality. Internet leads can take anywhere from six to 24 months to convert, making it difficult to maintain a steady, predictable pipeline of business.

6. Building Trust with Leads
When it comes to trust, internet leads often fall short. According to the National Association of Realtors, 63% of buyers and 75% of sellers prefer working with an agent referred by a friend or family member. A significant portion of internet leads report mistrust as a barrier to engagement. This lack of trust makes it harder to establish lasting client relationships.

A Better Way Forward: Building a Professional Referral Network

If internet leads come with so many challenges, is there a more effective alternative? The answer is yes—a professional referral network. Imagine building a network of trusted professionals who can refer clients to you on a regular basis. This approach allows you to:

– Leverage Natural Relationships: Asset-based professionals like attorneys, tax advisors, and financial planners talk to clients daily. Many of these clients are going through life changes that lead to real estate needs. By building a referral network, you allow these professionals to do the nurturing, saving you time and resources.

– Connect with Home Service Professionals: Home service professionals, such as plumbers and painters, are often aware of clients who may be preparing to sell. With a few strategic questions, they can identify leads for you, allowing you to connect with property owners before they even list.

– Develop a Relationship-Based Business: A referral network fosters trust and credibility as clients are introduced to you by professionals they already trust. This approach turns you from a “commodity” lead into a trusted advisor, building a foundation for long-term business success.

ProInsight: A Turnkey Solution for Building Your Referral Network

At ProInsight, we’ve developed a system to help you create a robust referral network that can replace your need for internet leads. With ProInsight, you’ll find tools and resources designed to help you build relationships with key professionals in your community, creating a consistent, reliable pipeline of clients who trust you from day one.

If you’re ready to break free from internet leads and embrace a relationship-based approach, explore the resources available at ProInsight.com. And check out our video on building a powerful relocation referral network to learn more about expanding your reach with high-quality referrals.

Conclusion 
In today’s competitive real estate market, building a steady pipeline of business is essential. While internet leads may offer a short-term solution, their drawbacks are clear. A professional referral network, on the other hand, can provide a reliable, cost-effective, and trust-based approach to business growth. By focusing on genuine relationships with other professionals, you’ll create a more sustainable, rewarding business model that delivers lasting success.

Ready to make the shift? Visit ProInsight.com to learn more about how we can help you build a referral network that will transform your real estate business.