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

Leads are the foundation of any successful real estate agent’s career. Without leads, it’s essentially impossible to close deals and make money. 

That’s why most effective real estate agents spend so much time generating leads. You might get them from a lead generation company, or you might dig deeper into how to generate real estate leads in some organic ways. Or, if you have a limited budget, you might attempt to work with a company you don’t have to pay until closing – otherwise known as pay-at-closing real estate leads. 

 A lead company that you don’t have to pay until closing? Sounds ideal. Maybe too good to be true? In this article, we’re covering everything you need to know about pay-at-closing real estate leads. 

Key Takeaways: 

• Pay-at-closing real estate leads can be a smart strategy. They are useful for agents who don’t have as much experience or want to broaden their network. 

• There are many ways to find potential partners in lead generation. Below, we cover some specific companies that provide pay-at-closing services, and you can try lender partnerships, military banks, and other avenues. 
• Pay attention to your ROI. While pay-at-closing real estate leads are a great component of your marketing strategy, they shouldn’t be your whole plan. Review campaigns and your bottom line to see what’s working, and combine pay-at-closing with traditional marketing tactics. 

What Are Pay-at-Closing Real Estate Leads?

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 a referral fee. Both you and the company will make money. It’s designed to be a win-win situation.

The Pros and Cons of Pay-at-Closing Real Estate Leads

So what are some of the caveats we talked about? Here are the upsides and important considerations when choosing whether or not to invest in pay-at-closing leads. 

Pros

• No upfront payment – 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 who aren’t making much money or are just getting started. It also means you don’t pay for the leads that don’t work out.
• Leads are more targeted – Like most lead generation companies, those that allow you to pay-at-closing will provide targeted leads based on your area and demographic. Additionally, a company that is paid at closing may be more incentivized to get you quality leads knowing their profitability depends on it.
• Take advantage of time savings –  Lead generation companies find leads for you. That means you save the time you may otherwise have spent making cold calls, knocking on doors, sending emails, and posting on social media.
• More flexibility for agents – With pay-at-closing real estate leads, agents can pick the leads they want to pursue and ignore others. You are not obligated to chase them all. 

Cons

• A higher degree of investment – Companies you pay-at-closing typically charge more than other types of lead generation firms. They may take 25% – 50% of your commission, and obviously, any investment is more than what you would have paid toward leads you generated yourself.
• Be wary of follow-up commissions –The company could require you to pay additional 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.
• It can be difficult for smaller agents – Pay at close leads may seem like an ideal option for new agents, but be careful. Most companies that offer these leads will only work with established agents with a strong record of effectively closing deals.

Pay-at-Closing Leads and Your Overall Strategy

pay-at-closing real estate leads can play a valuable role in your marketing strategy, but they shouldn’t make up the bulk of your tactics. It’s important to diversify and try a blend of digital, traditional, and pay-at-closing lead generation strategies. In addition, companies that offer pay-at-closing services tend to charge a high commission, so they don’t always yield the highest ROI. Make sure you include some methods that often achieve a higher ROI such as:

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

That being said, it’s a good idea to keep pay-at-closing lead generation as an available option. It won’t cost you anything to get referrals, and then you can decide if the leads you get are worth pursuing. Once you have the data, you can address what’s working and what isn’t. Review all of the numbers and results and then you can make an educated decision based on your bottom line.

Here are some other strategies that blend pay-at-closing real estate leads with other marketing programs:

• Targeted advertising – Use digital advertising platforms to specifically target individuals interested in pay-at-closing options. You can highlight the benefits of this arrangement such as reduced upfront costs. 
• Educational content – This is the sort of thing that regular customers might not be too familiar with. By creating informative content like blog posts, videos, or webinars, you can position yourself as an expert while attracting more potential clients or partners. 
• Landing pages – Design dedicated landing pages for your website that provide detailed information about pay-at-closing services. Include testimonials or case studies from satisfied clients. 
• Referral programs – Encourage satisfied pay-at-closing clients to refer their friends or family. Create a formalized referral program that rewards people who can partner with you in this way to generate new leads. 

Where Can I Find pay-at-closing Real Estate Leads? 

If you think that pay-at-closing real estate leads sound pretty intriguing, but aren’t sure where to find them, keep reading. These are the most reliable avenues for finding pay at closing services or lead generation. 

Traditional Pay-at-Closing Companies 

Several companies offer leads that you pay for 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.

A Busy Real Estate Agent Partner

There are plenty of agents who are so busy that they can’t take on any more clients – even when they want to. In this case, these professionals make great partners for taking on client overflow and getting a commission when the deal closes. While they can keep from disappointing potential clients, you can increase your client base. Both parties are likely to see the scenario as a win-win. 

Typically, these agents want you to sign a referral agreement contract before entering the deal. The terms of the contract will dictate the commission split and you’ll both get your payment at closing. Agents normally ask for approximately a 25% commission fee when offering referrals, but if you want to sweeten the pot you can expand that number. 

You might be surprised at the number of agents interested in commission splits. Try joining Facebook agent referral groups, sharing your interest at industry events, or sending out collateral like brochures or flyers. Create a word-of-mouth campaign where your network expresses your interest to other agents. 

Long-Distance Clients for Relocation Deals

Networking with other agents is always a good idea, and local agents can help you to attract referral deals. Expand your network, though, to more nationwide agents if you hope to get more pay-at-closing referrals. 

For example, consider an agent representing a client who hopes 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.

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. Additionally, 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 help. That’s because when people want to buy a home, the first step they tend to take is going to a lender to get pre-approved. As you know, 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 found their ideal agent yet. A lender they trust is in a perfect position to refer them to an agent. And that agent could be you!

You could start offering lenders a commission at closing if they recommend you for every transaction they plan to process. You can also make the process smoother by joining a lender referral program. You can find these through companies like Rocket Mortgage, Quicken Loans, and One Reverse Mortgage.

A few notes, though: Most lenders will only work with agents based on some minimum requirements. For example, they might prefer at least two years of experience working as a full-time agent with eight closed transactions in the past 12 months. On the other hand, some may have more relaxed standards – that’s why it’s worth a conversation. 

Military Affiliated Banking Institutions

Military-affiliated banks are another 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 will take their word regarding agent referrals. However, you should note that military-affiliated banks tend to charge the highest referral fees of all previously listed options.

Friends and Family

One of the most organic methods of finding referrals is through friends or family. Whether you are a seasoned expert or just beginning your career, chances are the people who care about you want to help. 

To motivate your connections to spread the word about your services, try offering a commission at closing. Since this isn’t their primary income, they’ll likely be happier with a smaller commission such as 5% or 10%. It’s just a small bonus that comes along with helping out someone in their network, so it’s also a win-win. 

FAQ About Pay-at-Closing Leads

1. FAQ: How does pay at closing work for real estate agents?

Pay at closing is a commission structure where real estate agents receive their compensation when the transaction is successfully closed. The agent’s commission is typically a percentage of the final sale price and is paid out of the proceeds from the sale.

2. FAQ: What are the advantages of pay at closing for real estate agents?

The main advantage of pay at closing for real estate agents is that they don’t need to rely on upfront fees or out-of-pocket expenses. Agents can focus on providing excellent service to their clients without the financial burden of marketing and listing expenses. It also aligns the agent’s success with the client’s satisfaction, as both parties benefit from a successful closing.

3. FAQ: Are there any potential drawbacks to pay at closing for real estate agents?

One potential drawback is that agents may need to wait for a longer period to receive their commission compared to upfront payment models. This can create cash flow challenges, especially for agents who rely heavily on consistent income. Additionally, if a deal falls through or the closing is delayed, the agent may need to wait even longer to receive their compensation. Additionally, some resources for pay-at-closing leads will only partner with established agents, so it can be tougher for new agents.

4. FAQ: How is the commission percentage determined for pay at closing?

 The commission percentage for pay at closing varies and is typically negotiated between the real estate agent and their client. It can depend on factors such as the local market, the complexity of the transaction, and the services provided by the agent. The commission percentage is usually a percentage of the final sale price, but it can also be a flat fee or a combination of both.

Pay-at-closing real estate leads can be a great way to generate income without upfront costs, especially when you’re early in your career. However, there are some downsides and there’s a learning curve. If you aren’t sure where to start, contact our experts, or try looking for a real estate mentor to help you make a difference in growing your business.