What Is Real Estate Lead Qualification & Why Is It So Important?
In real estate, lead qualification is a systematic process that involves gathering information about your leads to evaluate whether they’re ready, able, and willing to buy or sell. It occurs very early in the pipeline or real estate sales funnel, ideally when you’re making initial contact or even beforehand. Real estate agents have their criteria for what makes qualified leads. If someone doesn’t meet that criteria, they get disqualified. While getting disqualified leads may sound like a bad thing, the fact that you’ve identified them early on allows you to focus on more promising prospects.
Therefore, the reason why you must have a system in place to qualify real estate leads is that it allows for more efficient use of time. Time is a valuable, non-renewable resource that agents need to use as wisely as possible because once it’s gone, you can’t get it back. If you send all of your new leads to your sales funnel without qualification, you’ll waste countless of low-productivity hours attempting to sell. So, while having a huge pipeline of homebuyer leads can lead to closing more deals, it’ll also result in decreased efficiency and less revenue. Alternatively, when you know exactly what you’re looking for, you’ll have the ability to chase the right leads, right away and, hence, increase the effectiveness of your business.
In turn, focusing your time and efforts on qualified leads won’t leave you feeling overwhelmed or having a difficult time trying to determine leads to follow up with. Instead, you ensure working with the best real estate leads who’ll convert to high-level customers which allows you to increase your conversion rate. In addition, less wasted time and better leads should bring you a higher return on time invested. This is because real estate agents who qualify leads start transactions and close deals without any bad surprises.
Real Estate Agents’ Checklist for Lead Qualification
You can tell that qualifying buyer leads for realtors and agents help them in numerous ways. But how does the lead qualification process go? It’s actually easier than what beginner real estate agents might think! As mentioned, in order to qualify leads for your real estate business, you need to gather necessary insights that allow you to make a good judgment. To get this lead information, all you need to do is ask a set of 8 tried and tested questions before deciding to engage them further. Their answers will reveal to you whether this lead is actually worthy of your time and efforts and is likely to convert. Let’s take a thorough look at the 8 factors and questions that successful real estate agents ask to accurately qualify real estate leads, accelerate their sales cycle, and close more deals.
Factor #1. Location
Question: Are you looking at a specific location or neighborhood for buying?
If you’re a real estate agent in New York, you don’t want to generate buyer leads looking to buy a house in Chicago. These leads are simply irrelevant and a waste of your time as you can’t offer them your services even if they qualify for other factors. This is why location is the first lead qualification factor that will help realtors filter out homebuyer leads in real estate. Ideally, you want to get buyer leads in your market. This allows you to better show your experience and knowledge of the housing market and prepare a list of appropriate properties for sale that the lead might like. So, when you first get a call from a real estate lead, try to get the following
list of information first:
The exact property your lead is interested in (if possible)
The zip code(s) of the neighborhood(s) your lead prefers
How open is your lead to viewing similar properties in the different neighborhoods
How open is your lead to viewing properties in a nearby city or town
Moreover, note that if you’re looking to generate qualified real estate investor leads, another question regarding the location that you should ask is “How well do you know the housing market?” It’s important to know the level of knowledge investors have on the market and real estate business because it tells you whether or not they’ve done their research. The more educated real estate leads are, the more prepared they are to move forward with the transaction and the easier the real estate lead conversion process becomes.
Factor #2. Reason
Question: What is your motivation for buying a house?
This is a pretty simple and straightforward question, but it’s extremely important. Real estate agents need to determine whether or not their homebuyer leads have a legitimate reason for buying properties and reaching out to you. Their motivation could be because they’re first-time home buyers, to move-up, downsize, for retirement, real estate investment, due to job change, etc. This lead qualification question will bring light to lead information that will indicate if they’re motivated buyers and will convert into good clients rather than time-wasters. This will also help you later on in matching the right property to the right client based on their wants and needs, guiding clients towards a home purchase, and successfully closing the real estate deal with happy clients.
Factor #3. Budget
Question: What’s the price point you’re searching at?
Budget is a big indicator of qualified leads in real estate. By asking homebuyer leads this question, you’ll know how much they’re able to afford and willing to spend. It’s important for real estate agents to know this type of lead information to decide if they’re qualified.
Why? First of all, this tells you if they can even afford to move forward with the real estate transaction and make a purchase. If they are, then they’re headed in the right direction. Some leads will have no idea how much they can afford and you can help them by asking the following:
Did they save for a down payment? How much?
Do they have a good credit score?
Do they have debt? If so, how much?
These factors are important because they affect how much your real estate leads can afford to buy and whether or not they’ll get pre-approved by a lender. If they’re willing to provide this type of information and make changes, they might still be qualified leads.
In addition, just because a buyer can afford to buy a $500,000 house, that doesn’t mean they’re willing to spend that much. Also, some people have been told by a mortgage lender that they can afford that much but don’t really understand how much their monthly payments will be. It’s important for real estate agents to know what monthly payment they can handle. This will help you narrow down your list of houses for sale that your client can afford. You don’t want to waste time searching for and presenting properties to real estate leads only to find out they are way out of their price range.
Factor #4. Mortgage
Question: Have you been pre-approved by a lender?
After discussing their budget, it’s an easy transition to ask about mortgage pre-approval. Cash buyers are great, but the majority of buyers in the US housing market need some form of a mortgage to finance their purchase. And with the increasing number of homebuyers, this factor is becoming more important than ever. This makes being pre-approved for a mortgage one of the most important lead qualification questions. If your real estate buyer lead is pre-approved, this tells you a lot of things.
The first thing is that they’re clearly motivated and serious about buying. With a pre-approval letter in hand, buyer leads also prove (both to you and to sellers) that they can fund the purchase. This is another feature of qualified real estate leads for realtors because it shows that they’re ready to act and make a move NOW as they know where they stand with their budget and finances. It’s also a good sign if you get a call from a buyer lead who is not pre-approved but is actively seeking your advice and explanation. If that’s the case, you can simply get them in touch with your favorite lender. With that in mind, these are qualified real estate leads.
Factor #5. Agent
Question: How have you been searching for homes?
The next thing you’ll want to know in the lead qualification process is whether the lead is already working with another agent. Lots of people work with two real estate agents at any one time. It’s either because they’re not happy with the first agent or for reasons of their own. Logically, it’s better to find this out right away before putting too much time and dedication working with someone who has another option on the table and can cancel anytime.
Notice that the question is not “are you working with an agent?” That’s because some people might lie in hopes of hearing what you have to offer. By asking the above question instead, you’ll get a more candid response to be able to decide if they’re qualified real estate leads based on their answers. If the person is working with another agent, ask them if they’ve signed an Exclusive Buyer Broker Agreement. If they did, ask why they’ve called you instead and explain that their agent would be better to answer questions. It could be because they’re unsatisfied with their agent or that their agreement is ending. If that’s the case, you can further investigate how you can help them. But if they’re not working with another real estate agent, continue directly to the next question.
Factor #6. Preference
Question: Do you have any specific requirements for your new home?
Preferences for homebuyer leads may include the type of property, number of bedrooms and bathrooms, type of flooring, and other amenities they might be looking for. Qualified leads in real estate will give you detailed information about what they have in mind for their ideal home. In turn, this makes your job of matching them up with the right property for sale much easier. This simple question also helps real estate agents identify a number of things at once including:
How you might be able to help them – i.e. if you have the right experience for them
If they are realistic in their preferences based on their location, budget, and reasons
Where to look for properties that match their preference
How long it might take to close the real estate transaction
More qualified real estate leads will show that they’ve done their research before contacting you and will ask the right questions. Don’t worry about getting every last detail of their search criteria now – you’ll get more information if you meet in person. Your goal is to see if leads are motivated, realistic, and can convert into good real estate clients. To maximize your chances of getting that lead information, try asking this question in several different forms to get the most complete picture. For example, you can ask:
What is your ideal neighborhood for your new home?
How many beds and baths do you want in your home?
What features are important to you to have in your new home?
Do you have any unique requirements for your new home?
Factor #7. Timeline
Question: How soon do you want to be in your new property?
Successful real estate agents have a sense of how long their sales cycle will take from the initial contact with a lead to the closing of the transaction. Asking for their timeline helps you to figure out where in the cycle or real estate sales funnel this lead currently is to craft your sales strategy accordingly. The more precise your homebuyer leads are, the more qualified and willing they are to act now or in the near future. When qualifying real estate leads, you can also ask the following questions to determine their timeline:
How long have you been searching for a house?
How quickly are they ready to buy and move to the new house?
Are you waiting to sell your house before buying a new one?
Can you move forward if I find your ideal home tomorrow?
Answers to these questions will help you determine if your buyer lead has a realistic timeline in mind. For example, buyers who are thinking of buying in the next 2 – 3 years or say that they’re still unsure are not really ideal real estate leads. You also don’t want to work with those who don’t have an urgent reason to move soon as they’ll only waste your time. As for those who’ve been searching for a house for a long time, you can probably close them quickly if you are able to identify the mismatch and find the right fit.
Factor #8. Appointment
Question: When can we meet to further discuss your property search?
If you’ve gotten this far with a lead, you already have someone who is pretty qualified. By now, you know enough about this lead’s situation to help you determine how likely you are to convert them into a client. The last lead qualification question for real estate agents and realtors is to ask for a specific time and place to meet to finalize the arrangement. While it’s easy to rush to make an appointment, it’s best to leave this for last when you have a clear picture of the lead’s situation so you don’t waste your time or hurt your chances at real estate lead conversion. This is the ultimate way to determine how serious and qualified the homebuyer lead is.
High-quality leads are those who’ll suggest meeting up as soon as possible. If real estate leads don’t want to meet in person in the next week, however, they’re not ready to go forward with real estate deals and engaging them will only be a waste of your time. On the other hand, if they say they want to sleep on it, it doesn’t hurt to agree and follow up in a couple of days. See how they’ll react when you create a sense of urgency. Tell them how the real estate market is doing, what competition is like for homebuyers, and that good deals are available now so it’s important to get started. This is often when unqualified leads will start to object, which tells you they’re going to spend a bit more time in your pipeline.
4 Tips for a Successful Real Estate Lead Qualification Process
If you have a feeling you might reel in more deals with some tweaks to your real estate lead qualification process, you’re probably right. Here are 4 tips for improving your lead qualification process for the better:
#1. Use Automation Tools for Agents
In today’s real estate business, avoiding technology is almost impossible and an unwise decision for a real estate agent to make. If you don’t currently have automated real estate systems set up, you’re only lagging behind! This is the age of automated systems for agents. In fact, your lead qualification system can be set on autopilot so you can enjoy an increase in your efficiency and revenue.
#2. Develop Lead Profiles and a Lead Scoring System
Before you even begin the lead generation process, let alone the lead qualification process, you need to have an ideal customer profile. Simply identify what makes an ideal buyer for you and who you want to be working with in terms of demographics, research habits, values, needs, and priorities. By developing a highly detailed buyer profile before setting out to generate and qualify real estate leads, you will save yourself countless hours. Then, give each lead a score based on how well they match your ideal customer profile – i.e. how qualified they are and where they stand in your real estate sales funnel or pipeline.
#3. Be Prepared Before Calling Prospects
Whether it is an online real estate lead, a referral, or a past client, you should always have a plan for your conversation. We’re not saying you need to follow a script, but prepare your list of questions so they come out smoothly in the conversation. Don’t just rapidly fire questions at your prospects and make it feel like an interrogation. You also don’t want to be a crocodile salesman – someone who is always talking and not listening. Take the time to have an engaging conversation, recognize their true motivations, and approach them in a professional manner. This way, your chances of identifying qualified leads become much higher.
#4. Don’t Give up on Real Estate Leads Too Quickly
You shouldn’t be quick to assume that someone who’s not ready yet is simply a “dead-end lead”. This is one of the worst mistakes that agents should avoid. Yes, you should prioritize qualified real estate leads, but don’t forget about other leads in your pipeline. Instead, get them into a lead nurturing campaign. For example, those who don’t have a clear timeline in mind might end up being your best customers once they’re ready to buy. Give them housing market updates, send them monthly newsletters, follow up with them over the next 1-2 years, and build relationships with them until they’re ready to buy. With property CRM tools, an automated real estate marketing strategy in place, and lead profiles, you can isolate your hot leads while nurturing cold leads to move closer towards your goal.
Final Words on Qualifying Real Estate Leads
The biggest mistake you can make is working with low-quality leads who will probably never convert. This isn’t the way of making money as a real estate agent! The most successful real estate agents are those who eliminate unqualified leads as fast as they can and make sure they’re working only the best real estate leads that’ll convert into clients. To do this, you need to have a lead qualification process. This allows you to assess whether or not a person is worth your time and efforts instead of feeling like you’re just spinning your wheels. In turn, this will make you more efficient, productive, and motivated to move forward with the real estate transaction. Once you start asking the right questions mentioned in this guide and implement our tips, you can maximize your sales efforts and every dollar that you spend on real estate marketing and lead gen.