As a real estate professional, the sun rises and sets with the leads in your database. But even with a stellar coach or as part of a mega team — you’re largely walking the path alone.
Without a clear baseline for exactly how many leads should be converting to deals, it can be hard to gauge how successful you are in relation to the rest of the agents in your community.
That’s where becoming aware of the right industry benchmarks can be key to driving you forward.
And one of the most important metrics you can track is your lead conversion rate.
But with so many different lead gen and marketing strategies, how do you know what a “good” real estate lead conversion rate actually is?
Today, we’ll break down the average lead conversion rate in the real estate industry, share a clear formula for calculating your own healthy conversion rate, and reveal expert tips to help you close more deals.
Table of contents
- What kind of lead conversion rate should you expect?
- How to calculate your real estate lead conversion rate
- 6 tips for a healthier lead conversion rate
- Take control of your conversion rate with Follow Up Boss
What kind of lead conversion rate should you expect?
While many real estate teams will have their own definition of what makes a strong conversion rate, the industry average is a great place to start when setting a broad benchmark for success.
But here again, everyone has their own different idea about what the average real estate conversion rate actually is. Some will even tell you to shoot for an average of 5% just to stay afloat. But the truth of the matter is far more layered.
The actual national average real estate conversion rate falls somewhere between 0.4% and 1.2%.
According to the National Association of REALTORS®
So how does that boil down to sales?
The short of it is, you’d need to convert one to two clients for every 200 leads you bring in. However, the long of it is a little more complicated.
How to calculate your real estate lead conversion rate
Determining your current lead conversion rate is pretty straightforward and can be done with a standard sales equation that’s not exclusive to the real estate industry.
Simply take the number of conversions made during a given period (say, a calendar year), divide that by the number of leads you pulled in during the same period, and multiply the result by 100.
A simple conversion rate formula
The equation looks like this:
(Conversions/Leads) x 100 = Conversion Rate
Let’s take a look at a simple example.
Say you had 40 conversions in one year. During that time, if you pulled in 1,000 leads, then you’d divide 40 by 1,000. This gives you 0.04. Multiplying that by 100 gives you a 4% conversion rate.
Here’s how the equation would look:
(40/1,000) x 100 = 4
A conversion rate like this would put you well above the average real estate agent — but how achievable is that exactly?
To figure that out, it can be helpful to work backward.
- How many touches (calls, emails, texts, etc.) does it take on average to convert a lead?
- What’s the average number of contact attempts that it takes to make those touches?
- How many of those touches can you execute in a day?
“The goal is to maximize your efficiency on each ‘contact’ had with a lead, not the volume of contacts made. It is better to talk to five serious buyers/sellers than 100 potential buyers/sellers in the future,” explains Kevin Garcia, Real Estate Agent at WLM Realty.
Kevin is also quick to point out that you can’t have conversions without lead nurture.
“Those five great conversations if nurtured well will create referrals, and the large pipeline of referrals you can build will help minimize your lead generation effort in order to help you focus your time on other tasks.”
6 tips for a healthier lead conversion rate
Now that we’ve determined what kind of lead conversion rate you should aim for, it’s time to talk about how you can reach these goals.
Here’s some actionable advice to help give you a leg up.
1. Keep your database organized
As a busy real estate agent, your database can get messy, and fast.
When you’re actively fielding incoming leads from multiple sources, it’s crucial to keep things clean and organized so you can quickly identify your hand-raisers.
Shannon Milligan of Virginia-based RVA Home Team learned all about the importance of a well-structured database. Today, she credits her organized lead management system as a major driver behind her $22 million in annual revenue.
“I always heard about the importance of a database when I was coming up as an agent,” she said. “And you don’t see it in the beginning because you ask, ‘Why do I need a database? I have five people to talk to.’ But the problem is when you go from selling three homes to 30 and 40, it’s so hard to play catch up.”
Take time to ensure that all the leads in your database are properly labeled, documented, and tracked. Follow-up tasks should be set up as soon as a previous task ends.
Thankfully, that’s now much easier to do than back in the days of physical calendars and Rolodexes. With an advanced and well-integrated real estate CRM, you can use automation to easily keep in touch with each and every lead in your database depending on where they are in the buying or selling process — saving yourself a whole lot of pain in the process.
“I’m trying to be very focused now,” Shannon said. “I go into Follow Up Boss, and I add contacts to my database so I’m not freaking out. I have come to learn that the anxiety comes because I’m not prepared, because I didn’t have the systems.”
2. Follow up personally and with a purpose
Lead qualifying isn’t a black-and-white process.
Just because someone isn’t buying from you today doesn’t mean they’re not going to come back in a big way later. But without purposeful and personalized follow-ups, you might miss out on your golden opportunity to convert these prospects.
Factors like lead source, intent level, and purchase timeline all enter into the equation.
That means you can’t just set up a generic email drip campaign and call it a day. Instead, create personalized lead nurture drips based on the behavior-based criteria that can help you determine buying intent.
Consider creating messaging specific to different lead sources, price ranges, geographic areas, timelines, and more. And always aim to keep it personal.
Even something as simple as a phone call, holiday card, or handwritten note at just the right moment can go a long way toward boosting your conversion rate.
You could even get creative and welcome incoming leads with a personal video message.
With a quick, friendly ‘hello’ video, Barry and his agents are able to use automation to “greet” every prospect checking out listings on the team’s website. “You can see how ‘imperfect’ it is and that’s why it works so well,” he explains.
3. Never abandon your leads
Every lead you find is precious, so treat them that way. This person found you in a sea of other agents, and is in need of your help and expertise.
Don’t let that potential relationship fall through the cracks.
One way to help stay on top of your database while delivering a serious boost to your lead conversion rate is to use Smart Lists to easily filter and view any lead in need of a follow up.
“Real estate is a constantly moving industry with new technologies,” says Albert Vasquez, team leader for AV Home Experts at Keller Williams Realty. “I needed to have a platform that evolves with me.”
Whether it’s automations, smart lists, text messaging or any other tool, the critical element here is using technology to ensure you’re able to follow up consistently and strategically.
With a focus on consistent action and accountability, Albert and his seven-agent team have successfully increased their conversion rate and closed $47 million in sales.
“If you follow our processes consistently for a year, the metrics show me that you should easily net over $100k. You just need to have a good conversational level, know how to connect with the customer, and consistently follow your Follow Up Boss smart list every day.”
4. Make daily prospecting workflows easy
There’s no way to sugarcoat it, prospecting is a grind. But one of the worst mistakes you can make for your conversion rate is getting too comfortable and stopping your prospecting efforts.
The biggest rainmakers know that no matter what — you have to keep following up.
“The biggest thing is structuring your day so that you do follow up,” she said. “So, if you have a block of time Thursday from 9-11 a.m. to follow up and something urgent comes up with a deal, you’ve got to get those two hours back in the schedule,” says Debra Beagle of The Aston Real Estate Group, RE/MAX Advantage.
She recommends using Saturday mornings to make up for missed follow-up opportunities during the week. Of course, with the right automations, you can make sure you’re always sticking to a relevant follow-up schedule — even when you’re off the clock.
5. Use your conversion rate to guide your marketing efforts
Having a good working knowledge of your lead conversion rate both overall and per lead source can help you make smart marketing decisions that bring you greater overall ROI.
See conversion rate and other metrics with Follow Up Boss Reporting
For instance, to achieve a 4% conversion rate, you know you need 1,000 leads. Now, check what your average cost per lead is. If you find that you’re spending around $10 for one lead, it’ll cost $10,000 in marketing to generate 1,000 leads.
If you know that your average customer spends $400,000 on a home in your area, you could see $16 million in gross sales for the year if you hit your 4% conversion rate goal. At a 6% commission rate, you’d be looking at $960,000 for the year in your pocket. If you’re working with other agents and see an average 3% commission on these properties, you’re looking at $480,000.
With that kind of income potential, the $10,000 marketing budget would be well worth it, and your goals would be both achievable and profitable.
While numbers like this will always vary based on your unique market and target segment, leading brokers like Robert Slack have used simple lead conversion math like this to scale their real estate businesses to extraordinary heights.
“We were only connecting with 34% of our leads, but since we instituted a 45-day text campaign with CallAction [integrated with Follow Up Boss], that number has risen to 65%.”
In 2020, Robert and his team of 600 agents were investing $10 million annually in paid leads and, with the help of a healthy conversion rate, generating over $35 million in commissions.
6. Hold yourself accountable
Accountability is vital for every real estate agent.
But when rejections and dead ends start piling up, it’s easy to shy away from your responsibilities. It’s also the surest way to see your conversion rate start to dip.
If you’re not on top of it, a weak conversion rate can even go unnoticed for long periods.
One way to hold yourself accountable for your conversion rate is to track your progress.
That means following your progress or your team’s progress using a team reporting dashboard. This gives you access to your overall lead count, the deals in play, total value of the deals in each stage, and the day-to-day activities taken to convert those leads.
Of course, once you’ve pinpointed a problem with your real estate conversion rate, you also have to act. Reviewing your conversion reports can be a great opportunity to turn at-risk lead groups into new conversion opportunities.
Take control of your conversion rate with Follow Up Boss
As a real estate professional, you’re in charge of setting your own goals and controlling your own conversion rate.
It’s a daily grind, but one that can be made a whole lot easier with the right tools.
Follow Up Boss is the CRM that connects all your lead sources and marketing systems, organizes your data, and automates follow up. Thousands of top performers use Follow Up Boss as the core of their lead conversion system. Start your free trial today and start building a healthier business.