What Is a Bottom Feeder?
When it comes to creatures of the sea, a bottom feeder is an aquatic animal that feeds on or near the bottom of the body of water. However, people often use the term “bottom feeder” to refer to those who do not want to take care of themselves—instead relying on others for sustenance.
As an Independent Real Estate Broker, I’m always looking to recruit new agents to join our brokerage. And… I’m always checking out what the competition is offering and how the competition is advertising. Additionally, I’m always curious as to what agents are looking for when selecting a place to hang out their shingle.
What Constitutes a Free Lead?
I’ve spent a lot of time as a lurker on Craigslist lately, and see that many brokerage advertisements mention free leads. From this and from my conversations with agents, I’ve concluded that free leads are very exciting to agents who aren’t extremely busy or productive. After all, if an agent were busy and productive, he or she wouldn’t have time to check out Craigslist and might not even be looking for a change.
If a company or individual tells you or advertises that they are providing free leads, here is what you need to ask:
- Where do these leads come from?
- Are they already qualified? If so, how?
- How will these leads be delivered?
- Is there any special compensation agreement if the provided leads are converted?
The truth is that I can give you all free leads right now—each and every reader of this article. All I need to do is pick up the Yellow Pages or look up a specific street or neighborhood and provide you with a list of individuals—residents and owners. And… now you have unqualified buyer and seller leads.
Clearly, there are better ways to identify buyers and sellers and convert those individuals into closed sales. Know that you do not need anyone to provide leads to you.
The Pareto Principle and Real Estate Leads
In 1906, Italian economist Vilfredo Pareto created a mathematical formula to describe the unequal distribution of wealth in his country, observing that twenty percent of the people owned eighty percent of the wealth. In the late 1940s, Dr. Joseph M. Juran inaccurately attributed the 80/20 Rule to Pareto, calling it Pareto’s Principle. While it may be misnamed, Pareto’s Principle or Pareto’s Law (as it is sometimes called) can be a very effective tool to help you manage effectively.
The 80/20 Rule means that in anything a few (twenty percent) are vital and many (eighty percent) are trivial. In Pareto’s case it meant that twenty percent of the people owned eighty percent of the wealth.
In the real estate professional’s case, it means that eighty percent of your business will come from twenty percent of your sources. Think very carefully and make a list of all of your closings over the last three years. Identify patterns where leads and closings came from a single source—such as an attorney, accountant, past client, friend, or relative. Can you locate a series of closings that came from one family or as a result of one relationship? Can you identify one referral source that led to a significant number of closings?
Why spend your time focusing on brand new leads—people whom you don’t know and who may not be well-qualified—when the very best lead sources (the ones that already give you eighty percent of your business) are right in front of you?
Two Sources of Increased Closings
The key to increased success can be derived from two main sources: 1) individuals already providing you with leads, and 2) friends and acquaintances who would refer you until the cows come home.
For both of these sources, continue to develop top-of-mind awareness. Remind these folks that you are in the real estate business and that you appreciate all the referrals that they have provided.
Consider others that are or can be your very best billboards. Who do you know that speaks highly of you to others? How can you make this person’s life easier and better so that they will begin to refer you more business? What can you do for them?
Developing a strategic and tactical plan to increase your work with existing and new referral sources can lead to a significant increase in closings.
Teach a Man to Fish
When speaking about bottom feeders looking for free leads, I often wonder whether those seeking these leads will know how to convert an unqualified or minimally qualified lead into a ready, willing, and able homebuyer or home seller. That’s the reason knowledge is so important. As they say, “Give a man a fish, and you feed him for a day; show him how to catch fish, and you feed him for a lifetime.”
If you want to increase your real estate closings, quit looking for your next meal and focus on enhancing your own fishing skills. In this way, you can generate infinite leads and see closings throughout your career—no matter the market.