Are Zillow Leads Worth it in 2021
One of the most popular questions amongst realtors in 2021 is “are Zillow leads worth the cost?”. In a digitally-driven business world, real estate agents are feeling the pressure to run their business through online real estate lead generation companies like Zillow, Trulia, or BoomTown. But investing your marketing budget into these companies simply due to their popularity and name recognition can be a fatal mistake for realtors who don’t actually know what they’re doing.
There are certainly many benefits to using third-party outsourced real estate lead generation companies to run your marketing through, especially in 2021 when most real estate deals can actually be closed over the cloud digitally, but how much is too much when it comes to investing in your lead generation?
To understand this, real estate agents first need to understand the fundamental difference between the two methods of marketing. Outbound vs inbound lead generation.
Outbound marketing is the method of marketing in business when the business owner, sales agent, or entrepreneur is proactively reaching out to individuals who are in their targeted demographic of potential clients or customers, leveraging their time and investing sweat equity for more business. Outbound marketing methods in real estate include door knocking, cold calling, network prospecting, and social cold direct messaging strategies.
Usually, an individual who uses outbound proactive marketing tactics is only able to trade their time for money once and rarely see any duplication in their marketing, making it extremely difficult or even impossible to scale their business. By using proactive marketing strategies, you can only reach a select number of potential clients or customers once so there is no way for you actually repeat the process through a system so that you can free up your time and reinvest it back into your business.
Inbound marketing is the method of marketing in business when the businesses owner creates a brand, following or pieces of advertising that are specifically designed to attract their potential clients and customers to them and allowing them to react to their marketing instead of actively reaching out to them. Inbound reactive marketing strategies include social media, paid advertisements, blogging, YouTube video marketing, and investing in third-party real estate lead generation companies.
With inbound reactive marketing, the business owner is more likely to be able to create a system that automates their lead generation efforts so that they can invest either their time or money into their marketing once, distribute that method, create a recognizable brand in the market and attract clients and customers to them over and over again allowing for duplication in their business.
Tying this back to the original question of how much should real estate agents invest in their lead generation, we should strictly look at the inbound reactive marketing strategy. Because you are not directly trading your time for money when you are using any inbound reactive lead generation strategies, real estate agents who want to invest money in their lead generation can look at their marketing plan through a purely strategic business perspective using ROI as a measuring stick.
For example, if you invest $500 a month in paid ads to generate leads for your real estate business, and you can turn those leads into $50,000 in commissions every single month. Logistically speaking, you would invest that $500 every single month. If you know for a fact that you will get a non-negative ROI on your marketing budget, conventional wisdom states that you should invest every single time.
Think of it like investing in the stock market, if you were able to somehow see into the future and know that a $20 stock would be worth $25 in one month from now, you would invest as much money as you possibly can into that stock because you are confident that you will yield an above 0% ROI.
Now although the same theory applies in this situation for investing in third-party real estate lead generation companies to run your marketing for you, there is no possible way (yet) to actually determine what ROI you will get on your monthly marketing budget other than looking at historical data and analyzing the quality of service and marketing model from that company, comparing it to its substitutes. So when it comes to answering the question: Are Zillow leads worth it in 2021? The one thing real estate agents need to look at is the model of the company and how it compares to its substitutes, analyzing which one would have a greater ROI.
How Do Zillow Leads Work?
So the very first step for an agent to actually determine the answer to the question: Are Zillow leads worth the cost? is to have at least a basic understanding of how Zillow leads work.
Many agents think that the Zillow leads program is where you pay Zillow the company a certain amount of money each month, and they go out and use either proactive or reactive marketing to procure leads for you the agent and give you a number of leads which then you can contact as part of your pipeline. That is simply not the case, Zillow is not a place where you can purchase a list of fresh leads every single month in which you can then turn into prospects and then into closings. Zillow leads are much more similar to purchasing ad space on Facebook or Google or your local MLS.
Zillow’s lead generation program, Zillow Premier Agent is an ad purchasing program for realtors to purchase ad space for increased exposure on the Zillow search engine. When you become a Zillow Premier Agent in 2021, you are essentially purchasing an ad spot on other agent’s property listings in your target zip code. Then when a potential buyer sees that listing and wants to get more information or talk to an agent about the listing, they can click on your name and profile and reach out to you.
Along with the main feature, being a Zillow Premier agent also gives you ad exposure on platforms such as Trulia and RealEstate.com, top placement on Zillow’s agent finder in your zip code, as well as Zillow’s IDX agent site and CRM.
Are Zillow Leads Worth it in 2021?
While it is not an easy cut and dry answer as a simple yes or no as to whether or not Zillow leads are actually worth their cost (which we will get to in just a second) in 2021, it is wise to consider Zillow as a platform that you are able to run ads on for easy comparison against other substitute platforms and methods such as Facebook ads, Google ads, YouTube ads, and similar programs offered by your local MLS and Realtor boards.
But first, let’s look at the cost of becoming a Zillow Premier Agent.
The amount of money that you will have to pay for Zillow leads is based on the average price of homes in the zip code that you want to purchase leads in as well as the amount of competition of other Zillow Premier Agents in the zip code, very similar to purchasing ads for specific keywords on Google or Facebook. On average, agents can expect to spend anywhere from $20 to $60 per 1000 impressions (CPM) on Zillow leads, with varying results depending on your market. And since Zillow suggests that agents pay for at least 5000 impressions per month to generate one or two leads you are looking at spending around $100-$300 per month on the low end, paying $50-$150 per lead.
To put this into perspective, let’s compare that to a similar ad purchasing platform like Facebook Ads for real estate agents. In 2021, the average CPL (Cost Per Lead) for real estate agents using Facebook ads is $37, around $10 lower than Zillow on the lowest spectrum. Also, Facebook advertising in general costs around $7.19 per 1000 impressions for one ad, which is again just over $10 lower than Zillow on the absolute lowest costing example. And lastly, it was estimated in 2021 that Facebook has around 220 Million users in the U.S. while Zillow has an average monthly unique visitor count of 36 million.
So you can see from a simple math breakdown, whether or not paying for Zillow leads is “worth it” for real estate agents in 2021. But it’s hard to compare two methods of lead generation on two different platforms used for two different purposes with a simple math breakdown of ad spend per lead.
Running ads on Facebook or Google or even YouTube is no joke, you are going to have to learn a whole new marketing platform or pay a third party company to help you generate, manage, and qualify those leads. A lot of agents opt-in for Zillow leads because they believe that Zillow will generate the best quality leads as well as take care of everything else so all they have to do is close the transaction.
If that’s the reason why you are considering paying for Zillow leads then I am sorry to inform you that those are only false beliefs. Like any other strategy of lead generation, Zillow leads take time to work and follow up to close. So if you think that the reason why Zillow leads are worth the cost in 2021 is because of the quality of leads they generate and the guaranteed business that you are going to get, then I am going to show you exactly why Zillow leads are NOT worth the cost using those exact metrics.
5 Reasons Why Zillow Leads are NOT Worth the Cost in 2021.
- You are Getting Shared Leads
- There is Very Minimal Lead Qualification
- You Have to Create Your Ow Follow Up
- There are No Guarantees of Closings and Commissions
- You are Essentially Paying for Ad Space
1) Shared Leads
The first reason why I believe Zillow leads are not worth the cost for agents in 2021 is that the leads that Zillow provides you are all shared leads. In real estate, shared leads are leads that are not exclusive to any one agent which means that multiple agents have access to this individual’s contact information, exposure, property profile, and situation. This means that while you do have the ability to contact leads given to you from Zillow, there is nothing binding them down to work with you as their agent so you are in theory and practice still competing with other agents in the marketplace for this buyer.
In contrast, exclusive leads are leads that only one agent has access to, which means that this agent is not competing on the open market to work with this lead because they are not getting the same information that you are getting as the agent who has received this exclusive lead. Most of the time, Facebook ad and Google ad leads are exclusive leads, because when a potential buyer or seller clicks into your ad, they are seeing you stand out in a crowd of other agents and have already committed in their subconscious mind to work with you.
2) Lead Qualification
The second reason why Zillow leads are not worth their cost is that there is very minimal qualification on Zillow’s end for the leads that you do receive from them. Now most agents who have been in the business for a couple of years know that a lead does not guarantee a closing (we will get to this soon), and that sometimes buyers are simply just dreaming of buying a home with no actual plan or qualifications. With Zillow leads, the only qualifying factor that they have for the leads that they send your way is the implication that the individual is interested in buying a home from their actions of searching for homes on a real estate website.
Although that is usually a good determining factor for agents that the lead is actually interested in buying a home it doesn’t necessarily qualify this lead at all. Because so many buyers in the marketplace are so uneducated on agency and how the real estate brokerage world works, they can sometimes mislead the agent.
Leads that come from Zillow can include a variety of factors that immediately disqualifies them from being a potential client such as buyers who are already working a buyers agent that is just doing their own research on their downtime, individuals that have not and can not qualify for a loan, dreamers that are simply looking at their dream homes and envisioning living in them, pranksters that want to troll, etc.
3) Follow Up
As an agent, you should understand by now that follow up is probably the most important aspect to your success in business and always leads to a higher conversion rate. Study shows that the average number of times that a sales rep must contact a lead before they actually become a buyer or a client is at least 8 times! So by increasing the lifespan of your leads, you are in turn closing more transactions and getting higher conversion rates long term.
Although Zillow gives agents access to their own CRM platform along with an IDX agent site, they do not actually monitor or follow up with your leads. You as the agent are 100% responsible for converting a lead into closing the moment Zillow delivers the lead to you, including all follow-up responsibilities. So just because Zillow has given you a lead does not mean that you will automatically get a hot prospect who is ready to buy a house the next day.
4) No Guarantees
The last two points work well to make up the 4th reason why Zillow leads are not worth the cost for real estate agents in 2021. And that is that Zillow leads have zero guarantees. Like I mentioned earlier, agents have a false belief that Zillow leads will not only guarantee leads, but guarantee results, both of which are not true.
For one, you are essentially paying for ad space on a search engine website, so there are already no guarantees that you will get any leads at all for your marketing efforts. And two, even if you do get leads, there is no guarantee that those leads are qualified, which leaves you the agent to spend a lot of your own time qualifying those leads instead of closing deals. Also, since you are 100% responsible for all follow up as well, it depends on how well your follow-up system is and how diligently you follow up with the lead that determines whether or not you can actually turn those leads into commission checks.
5) Paying for Ad Space
Lastly, I just want to reiterate that Zillow leads are just another way for agents to purchase ad space for more exposure for themselves and their brand. In theory, Zillow leads are the same as Facebook and Google ads, where an agent pays for their ad to be featured in hopes of getting enough interest from leads. If you are looking at it from that perspective, then you have to compare the cost and the result of Zillow leads with the cost and result of Facebook and Google ads like I did in the previous example.
For agents, the biggest concern of using Facebook or Google ads is having to learn a new system and a new skill and they would rather pay Zillow to manage their leads and ads for them than to pay a third party marketing agency or real estate lead generation company. We have already shown that Zillow does not do any of that, while most independent marketing agencies out in the marketplace do. So even with the increased costs of service fees, you are getting a better ROI of your time, money, and emotional well-being by using other lead generation methods, paid or organic.
While Zillow leads are a popular form of lead generation used by many agents with larger budgets that have actually yielded successful results, when compared to other forms of paid inbound lead generation strategies, Zillow leads are simply not worth the cost. In 2021 especially, many agents are opting their entire marketing plan into digital lead generation methods so relying on a platform like Zillow is definitely not necessary.
With increased knowledge in the tactics and inner workings of digital marketing. and lead generation in real estate, agents should now be able to either pursue on their terms a new strategy of online lead generation or invest their money in alternative lead generation strategies to Zillow that are both cheaper and provide more value.