Real estate agent marketing for new business

Real estate agents have to build their own business. Their brokerage may provide some leads. But an agent is successful or not based on their ability to develop a healthy roster of active clients. Below is how they generate new business.

Real estate is largely word-of-mouth and referrals

The majority of sellers find their agent through a referral from a friend or by using an agent they worked with before. And most sellers only contact one agent to decide who would sell their home. In summary, over half of agent business is from people an agent knows directly or through one degree of separation.

Sphere of influence and referrals from clients, friends, agents, and service providers

The popular term in real estate to address the people which an agent has some influence is sphere of influence or SOI. Many agent marketing techniques focus on cultivating this sphere of influence. This is why agents send email market updates and constantly update their blogs and social profiles.

Agents also build referral relationships with service providers. These include general contractors, mortgage brokers, and agents in other markets. These professionals are often one of the initial calls buyers and sellers make. Many agents generate substantial business from general contractors who are often fixing up homes before sale.

Buffini and Company, which provides real estate agent coaching,  encourages agents to build their sphere of influence. Source: Buffini and Company.

Using email marketing and personal websites to cultivate sphere of influence and referrals

Due to the importance of the sphere of influence and referrals, many agents focus on developing a niche. They then promote this through their email marketing and personal website. Many agents will on a neighborhood or property-type. They will then add potential clients and referrers to their sphere of influence and update them with information on this expertise.

Philadelphia real estate agent Mark Wade presents neighborhood and property-type expertise in his site Center City Condos. Source: CenterCityCondos.com.

Online channels help jumpstart buyer and renter business

Every buyer or seller starts as a lead, a term for a contact who can turn into a paying client. Most lead generation is focused on capturing buyers. The process of generating leads can be expensive. But most agents spend under $5,000 buying leads. Often, agents will buy leads to jumpstart their business and then stop. But others, especially those supporting large teams, will continue to buy leads to maintain and grow a high volume of business.

Lead buying channels

The most well-known source of paid leads online is Zillow. Zillow offers a platform called Zillow Premier Agent. It  allows agents to pay for sponsored placement on home listings. Agents who pay for the service  receive leads from buyers who reach out on these listings. Agents constantly monitor lead quality, or how likely the lead converts to a sale. Lead quality can vary by platform or even by geography or listing. Many buyers submitting inquiries might expect the listing agent to reply or simply may not be ready to buy.

When you click “Contact Agent” on a Zillow platform, an agent may be paying to receive your inquiry and reply to you. Source: Zillow.

Online referral channels

Some platforms focus more on referring buyers or sellers looking for an agent, rather than a home. Homelight is an example of this type of service. It helps buyers and sellers find agents to help them. Agents pay for access to these buyers and sellers only when a lead converts to a sale.

Reviews via Yelp and Zillow

Online reviews are a way agents generate free inbound buyer and seller clients. Many prospective buyers and sellers read through reviews to discover which agents best fit their needs. Yelp and ZIllow will also rank highly in Google for terms such as “Best agents in New York City”. Agents understand this and often focus heavily on capturing positive reviews from their clients.

Social media

Many agents build presences on Facebook, Instagram, YouTube, Twitter, and LinkedIn. Their goal is no different than it is with any other channel: position themselves as experts and build their sphere of influence.

A large amount of new business is captured offline

Farming, door knocking, cold calling, and direct mail

Many agents use a process called farming. This approach is essentially picking locations and audience groups, or farm areas, to specialize in. Agents then use a variety of marketing techniques to build relationships for each area. This is often includes old-fashioned door-knocking, which is literally knocking on doors and meeting with prospective buyers and sellers. Agents also cold call people in the neighborhood to chat and send mail to relevant addresses. A good example of direct mail is “just sold” postcards. When an agent sells a home in a neighborhood, they will send a postcard to neighbors to showcase the home and sales price. This positions the agent as a neighborhood expert.

A sample “just sold” postcard by The Glockler Group showcases to neighbors that this agent team has successfully sold a home in the neighborhood. Source: The Glockler Group.

Targeting FSBOs and expired listings

Agents often focus on two areas where an active seller may be willing to work with a new agent:

  • FSBOs: For Sale By Owner homes or FSBOs (pronounced “fizz-bo”) are not represented by agents. Many agents will view FSBO listings as opportunities to reach out to owners and offer their services. Selling a home is complicated and FSBO owners may decide to hire an agent after discovering this. Agents try to be top of mind if and when a FSBO seller makes the decision to hire an agent.
  • Expired listings: Each listing agreement usually has an expiration date. If an agent has not had success selling a home, the owner may elect to work with someone else. This presents an opportunity for a new agent to pitch the owner. These are often sometimes called expireds, and, less frequently, expos.

For both approaches, agents are often very persistent. They must pitch how they are going to get the owner’s home to sell for more and faster than the owner or another agent can. It can also be challenging to get information on both types of properties. Expired listing information, for example, may be under the name of the prior agent rather than the owner. Often, agents buy marketing lists from companies that specialize in finding FSBOs and expired listing owner contact information.

Open houses

Open houses are frequently viewed by consumers as a tool to sell a home. But they also generate buyer leads for agents. After all, a person showing up to an open house is likely in the market to buy a new home. There is even a segment of software products like Open Home Pro designed to help agents capture buyer leads at open houses.  


Tools like Open Home Pro help agents collect buyer leads at open houses. Source: Open Home Pro.

Other local approaches

Agents are creative with their approaches to marketing. It’s hard to be all-inclusive with methods because there are so many. But here are some other popular ones:

  • Seminars and educational presentations: many agents have success teaching first-time homebuyer classes or “how to sell your home” courses at local schools and employers. This allows agents to position themselves as experts and interact with buyers and sellers before they have decided on an agent.
  • Local associations and events: whether it’s the PTA or a local fair, many agents with local expertise have found that being visible in the community pays off. This is why you’ll see brokerage-sponsored baseball teams or question and answer booths at local fairs.
  • Relocation partnerships: many agents work diligently to become the preferred relocation agent for a local employer.
  • Park benches, billboards, magazine ads, and everything else you can buy: agents are creative in their branding. Methods can vary significantly market-by-market. In NYC, many agents advertise on taxi TVs, and in Miami agents may buy a billboard.

How much agents spend on marketing

There are two ways to determine how much agents spend on marketing each year. One way is to estimate the average spend of each agent. The other is to think about spend as a percentage of agent gross commissions income. I use a survey from Real Estate Webmasters as a foundation for some of these estimates.

The average active agent spends ~$12,000 annually on marketing. This is skewed upward by luxury agents who spend significantly more on marketing than the typical agent. There are roughly 1.35 million active agents. As a result, one estimate of online spend from this approach would be $16.2B (1.35 million x $12,000).

Using average spend per agent from a Real Estate Webmasters survey, we can estimate ~$16.2B in annual real estate marketing spend from agents.

A more-conservative estimate that accounts for lower-performing agents uses average marketing spend as a percentage of gross commission income (GCI). Average marketing spend as a percentage of GCI is around 12.5% for agents with under $100K in GCI, 6% for agents with $100-300K in GCI, and 10% for agents with over 300K in GCI. Total agent commissions are  around $70 billion in total. Using the 6-13% range for marketing spend as a percentage of GCI, total marketing spending range should be $4.2-9.1 billion.

Using the percentage of gross commission devoted to marketing spend the Real Estate Webmasters survey, we can estimate ~$4-9 billion in annual real estate marketing spend from agents.


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