Real Estate Leads You Pay at Closing: Good or Bad Idea?

Leads are a lifeblood for real estate agents. Agents follow leads to close deals and make money.

There are many ways to generate real estate leads, but one of the most effective ways is to get them from a lead generation company. These companies offer a list of how to generate real estate leads agents, such as pre-foreclosure prospects, FSBO prospects, probate prospects, and so on. They charge a fee for their services.

Working with these companies can be challenging for new agents. Many struggle to sell homes and don’t have much money to invest. A lead company that you don’t have to pay until closing may seem like an ideal option. But are these companies too good to be true?

What Even is a Pay at Closing Lead?

Most lead generation companies require you to pay upfront costs or monthly fees to access leads. A lead generation company you pay at closing will only ask for payment once the deal closes. You will pay in the form of a referral fee. Both you and the company will make money. It’s a win-win situation.

Most of these companies will allow you to narrow your search demographic so the leads you get are more likely to convert.

Are They Worth It? Pros and Cons of Pay at Closing Leads

Paying at closing seems ideal. But it comes with its share of pros and cons. Here are some to consider.

Pros

You Don’t Pay Upfront: The biggest and most obvious benefit of paying leads at closing is that you don’t have to pay upfront. It’s an affordable option for realtors that aren’t making money. It also means you don’t pay for leads that don’t work out.

Provides Targeted Leads: Like most lead generation companies, those that allow you to pay at closing will provide targeted leads based on your area and demographic. A company you pay at closing may be more incentivized to get you quality leads knowing their profitability depends on it.

Time-Saving: Lead generation companies find leads for you so you save time you may otherwise be spending making cold calls, knocking on doors, sending out emails, and posting on social media. It allows agents to focus on more critical tasks like closing deals.

More Flexibility: Pay at closing deals provide more flexibility to agents. Agents can pick the leads they want to pursue. Other companies will give you a set amount of leads. You are not obligated to chase them all. But not doing so means losing money on a pre-paid lead.

Cons

Expensive: Companies you pay at closing typically charge more than other types of lead generation firms. They may take 25% – 50% of your commission.

Follow-Up Commissions: The company could require you to pay follow-up commissions for repeat customers. If they find you a customer, and that customer decides to buy or sell with you again, you may have to pay them a commission for subsequent deals.

Not Great for Smaller Agents: Pay at close leads may seem like an ideal option for agents that are just starting. But be aware that most companies that offer these leads will only work with established agents with a strong record of effectively closing deals.

Where Should Pay at Closing Leads Fit Into Your Overall Strategy?

Pay at closing leads should be a part of your strategy, but they shouldn’t be the main focus. Companies that offer pay-at-closing services charge a high commission. It’s critical to integrate other methods that yield a higher ROI. These include:

• Door knocking
• Social media
• Cold calls
• Emails
• Video Marketing
• Blogs
• Podcasts

…and the list goes on.

But keep paying at closing lead generation as an open option. It doesn’t cost you anything to get referrals. You can decide if you want to pursue leads as they come up.

Determine what’s working for you and what isn’t. Consider your bottom line when determining the role pay-at-closing leads should play in your marketing strategy.

Our Personal Experience with Pay at Closing Leads

If you are trying to decide if a pay-at-closing lead generation strategy is right for you, it may help to hear what the experience was like for one of our agents. Enter Chris Heller.

“When I started as an agent, things were rough. I didn’t know where my next client was coming from. I had debts from my education I was still paying off. I didn’t have much to invest in lead generation.

Then I heard there were lead generation companies I wouldn’t have to pay upfront. With nothing to lose, I said, why not?

I quickly discovered that most of these companies required agents with extensive experience I didn’t have. I finally found one that was okay with working with beginners. The leads weren’t as high quality as some other platforms, but I was able to close a deal. And that helped me get more leads, so it was worthwhile.

If you are starting with pay-at-losing lead generation, remember, these companies are only going to get you leads. It’s up to you to close it by:

• Following up quickly: Follow up within 24 hours (preferably sooner) to increase your chances of success
• Present yourself as professional and knowledgeable: Be confident when talking to clients. Be prepared with a strong online presence to back it up.
• Stay Organized: Stay on top of your leads so you know where they are in the funnel and provide personalized marketing materials

The fact that I could close a deal made the partnership worthwhile. And once I got the experience under my belt, I was able to close more deals, which was a bonus.

But I’m not gonna lie. I did have to part with a good deal of my commission. It was more expensive than cold calling or emailing, although it was less time-consuming.

Now I like to diversify my lead generation. I continue to work with pay at closing companies, but I’m picky about the leads I pursue. It still works for me, especially when it’s slow.

Where to Get Pay at Closing Leads

There are a few options for agents looking for pay at closing leads. Here are some to consider:

Traditional Pay at Closing Companies

Several companies that offer leads you pay at closing. These include:

• Agent Fixup: This company uses proprietary software to find the best buyer and seller matches. They claim to offer exclusive leads.
• Agent Pronto: Agent Pronto will alert agents via text or email when a new referral comes in. They will send the referral’s name, city, estimated sales price or budget, and a link to a page where the agent can accept or reject the offer. The company typically takes 25% to 35% of the commission.
• List with Clever: List with Clever sends referrals based on agent reviews. If the agent gets excellent reviews, they will continue sending them referrals. They may charge a flat fee or a percentage of the commission.
• Effective Agents: This company has strict requirements regarding the agents they accept in their network. If you meet their high standards, you will get quality leads.
• Upnest: Upnest advertises to buyers and sellers promising them they will find them the best agents. They claim to save agents thousands on commissions. Use your discretion in determining if their sales tactics are legitimate.

Partner with a Busy Real Estate Agent

Many real estate agents are so busy they don’t have the bandwidth to take on more clients. You can partner with these agents to take on their client overflow and give them a commission when the deal closes. This situation works as a win-win. It keeps them from disappointing potential clients and it increases your client base so you can earn income and continue growing your business.

Usually, you must sign a referral agreement contract with the agent before you enter the deal. The terms will dictate the commission split. You will both get your payment at closing.

There are many ways to connect with agents interested in commission splits. You can join Facebook agent referral groups or express interest via word of mouth. You can send out brochures, fliers, emails, and more.

It’s typical for agents to ask for a 25% commission fee when offering referrals. However, you can advertise that you will go beyond 25% to sweeten the pot.

Partner with Clients Across the Country for Relocation Deals

Networking with local agents can help you attract referral deals, but you may also partner with agents nationwide for leads you pay at closing. Here’s how it works:

Say the agent represents a client looking to sell in one state and buy in another. They will represent the client in selling their home locally while you will help them find a home in your neighborhood. Offer them a referral fee to make them choose you over other agents.

Join a Real Estate Referral Network

A real estate referral network will allow you to receive and refer real estate leads. Some referrals vet leads to ensure quality, while others do not. Do some research to find the ones that work best for you.

Most of these companies won’t charge a fee until you close. However, the amount they charge may vary.

As a side note, established agents may consider becoming referring agents. Some agents make as much as 50% of their annual commissions by referring leads to other agents.

Lender Referrals

Agents and companies aren’t the only sources for real estate referrals. Lenders may also get you headed in the right direction.

When people want to buy a home, the first step they tend to take is to go to a lender to get pre-approved. Pre-approval tells sellers that prospective buyers have the funds to buy the home. It reduces the chances of the deal falling through and increases the likelihood their offer will be approved.

People getting pre-approved may not have teamed up with an agent. A lender is in a perfect position to refer them to an agent. And that agent could be you.

Offer lenders a commission at closing to ensure you will be recommended for every transaction they process.

For a smoother process, consider joining a lender referral program. These programs are offered by companies like Rocket Mortgage, Quicken Loans, and One Reverse Mortgage.

Most will only work with agents with minimum requirements such as at least two years of experience working as a full-time agent with eight closed transactions in the past 12 months. But some may have more relaxed standards.

Military Affiliated Banks

Military-affiliated banks are another type of lender to network with on leads you pay at closing. They provide VA loans for veterans. These loans work much like traditional mortgages, but they offer additional perks like

• No down payment
• No prepayment penalties
• Low-interest rates
• Flexible terms
• No closing costs

You can partner with military-affiliated banks to get recommended during the preapproval process. Many of these banks have robust referral services available. And with several loyal clients, buyers are likely to take their word regarding agent referrals.

On the downside, military-affiliated banks tend to charge the highest referral fees of all previously listed options.

Friends and Family

Hopefully, friends and family will want to help you early in your career by sending you free referrals. But you can offer them a commission at closing to make them more motivated to get the word out there. As a bonus, they are likely to be okay with smaller commissions closer to 5% or 10%.

Commission Advances

Commission advances differ from leads you pay at closing. They are more like loans that help you pay your bills before closing. Most of them offer loans of around 80% of your commission. However, they offer steep interest rates of up to 10% of the advance.

Several companies offer commission advances. eCommission is a popular choice for realtors as it offers low rates, and a fast application process and funding.

Expert Opinions

So are the leads you pay at closing worth it? Here’s what some experts say:

 Hacking Real Estate

Hacking Real Estate posted a video called Hacking Real Estate Leads, Pay at Closing. He recommended two lead generation pay at closing companies:

• Home Light: Home Light was recommended for providing quality leads and valuable agent advice. They also charge a relatively low referral fee of 12.5%.
• Agent Harvest: Agent Harvest only works with three agents per geographic area to ensure exclusivity.

Hacking points out the pros of leads you don’t have to pay at closing such as saving time, getting quality leads, and lowering risk. On the downside, he mentions that beginners who need these services most are often not accepted by the programs. He also discusses the disadvantages of high referral fees and referrals on future transactions.

Real Estate Training

Josh Marriot of Real Estate Training Posted a video called 16 Pay at Close Lead Providers for Real Estate Agents. He feels pay-at-close leads as a quick and easy way to get leads. He also recommended  the following platforms:

• Opcity: Marriot says Opcity doesn’t always provide quality leads but they do not have restrictions on who they work with. This policy makes them a good choice for new agents.
• Redfin: Marriot also recommended Redfin as another platform that does not put restrictions in place for newer agents.  However, more experienced agents may become frustrated with the platform as they require a list of past clients which is difficult for some agents to access. New agents who don’t have extensive client lists may have an easier time qualifying.
• Rocket Homes: Marriot also talked about Rocket Homes which he recommended because it is affiliated with Rocket Mortgages, the largest lender in the nation. However, it is not the best choice for new agents because the platform only accepts agents with at least two years of experience.

Jimmy Burgess

Jimmy Burgess put his two cents in publishing the video Real Estate Generation Leads with No Upfront Costs. He backs this business model because it allows agents to grow their business without upfront fees. He also mentioned how agents get better quality leads the more they close.

Here are some pay-at-close platforms he recommended:

• Upnest: Burgess recommended Upnest, a company that requires agents with a strong online presence, positive reviews, and strong history of closing deals. Although the requirements are strict, the leads are high quality.
• Ojo: Ojo is a platform that nurtures leads before passing them on to agents. It has high agent standards, but it allows you to pass on leads to partnering agents making it a smart choice for real estate teams. The fact that the leads have been nurtured increases your chances of success.
• Estately.com: The third platform Burgess named was Estately.com. It has high standards including three years of experience and letters of recommendation from past clients. The team stays involved throughout the lead generation process to ensure you provide clients with a high level of service. They also maintain contact with the title company to make sure their deal stays on task.

Real estate leads you to pay at closing are a good way to generate income with no upfront costs. But they come with their share of downsides. Will you include them in your marketing strategies?