Hey Guys. I have heard conflicting reports about offering money to people who send you leads. Is it legal? Does anyone here do it?
There are tons of lead generation websites that you can pay to send you leads. As far as I know there isn’t a problem if you end up buying a property from a lead you buy.
If you’re talking about paying a referral fee, that’s generally not allowed, although there may be some way around it in some cases. Personally I haven’t found this to be effective. You just can’t rely on other people to pass the word around. It’s nice as a little something extra naturally created by the buzz around what you do. But I think it’s a waste of time to specifically spend your time trying to artificially generate referrals.
I’ve been at this for 7 years now and in all that time I’ve received only one decent referral lead, and even that didn’t turn into a deal. The funny thing is that referral came directly from a FSBO that I cold called.
I was wondering the same thing. I was approached by a mortgage company who puts investment deals together in NC & TX. They offered me money for every lead I generate that turns into a sale. However, I am more comfortable setting it up so I get paid on a per lead basis. Once I can figure out what their conversion rate from lead to sale, I can back into how much I can charge them on a per lead basis based on what they were going to initially pay me per sale. This way I am compensated for marketing only and not paid on whether or not a deal closes or not.
Good evening Folks,
I pay for leads all the time. Last year it was where about 90 % of my business came from. I pay 2 grand for a successful lead. One kid made 38k from suppling leads for me. It is legal.
I run additional adds now so a lot of business is coming from motivated sellers that directly. I paid 4k last month and 2k so far this month for successful leads. It has been a home run for me !!
Darin
Sounds like a good deal, what type of leads do you look for? Is there any special area of interest?
Richard Stephens
The type of leads I look for and pay for are the ones that produce a profit for me. If a person brings a property attached to a motivated seller…then when I purchase the property I also pay 2k to the person who brought me the lead. If that same person brings me a buyer for any of my property’s I also pay 2k when the property closes. I purchase all types of property, fixers, mobiles, new construction,commercial and bare dirt. Any thing that feeds my family !!
Thanks Richard, Darin
If the question is, “can I pay a referral to someone else to bring me deals”, then the answer is yes.
Restrictions/laws are in place that forbid settlement service providers (like lenders, appraisers, realtors, etc.) from paying referral fees on some residential situations (consult RESPA for further details).
When done correctly, referral based marketing/selling is the most effective form of marketing available—think about it like “making the world your salesforce”. Greed is one of the most powerful hooks (it’s a part of human nature) and appealing to it the right way, can lead to some terrific results.
Regards,
Scott Miller