Has anybody used Zillow Premier Agent? Are the leads worth it?

[Hemanth Grandhige]

I quit my job a year ago and spent the last year flipping and building my rental portfolio.  I can't say I'm upset with the way things have gone but I need a steady income to keep everything moving forward.  I got my real estate license and just parked it as an assistant under my mentor. (She is an agent with ReMax.)  I'm thinking of pulling it out, dusting it off, and getting some listings.  

I have been contacted multiple times by Zillow to sign up as a premier agent.  The cost isn't terrible, a couple hundred a month at the most.  They claim the leads increase 44x that of just listing yourself on their website.  

Does anybody have any experience using Zillow Premier agent?  If so I'd appreciate any insight you can provide regarding getting the most from the service.

Thanks,

Hemanth

[Charlie MacPherson]

For what it's worth, I did a smaller spend on:

1. Trulia (before the merger with Zillow).  Somewhat high volume of poor quality leads. About 85% in the poorest town in the county, which was not the primary target of my campaign. It was one of the "bonus" towns.

2. Realtor.com.  Very low quantity of poor quality leads. Higher price towns, but still not converting well at all.

3. Google. I'm managing my own campaigns by braille.  Fair quantity of leads, but suspiciously, a significant number of clicks are in the 2 AM to 3 AM time frame.  Not converting well, but the campaign is still new and needs tweaking.

I'm about to do a JV with a much larger real estate brokerage from another state. When we talked, they shared their study results obtained by talking with brokers around the country who are diligent about data tracking. Here's what they found.

Zillow, Trulia and Realtor (ZTR) won't make hard claims on lead quality, but they will "suggest" that you should close 5% of raw leads.

This JV company's study showed that across the nation, ZTR leads actually converted at 0.5% to 1%.

With that, you can figure out whether a spend is worth it.  My cost for the Realtor.com leads was a little over $500/month.  I got about 25 leads over 6 months.  The average commission in my pocket (the pocket that's paying for the leads) is $7000 per closed sale.

Assume that I covert at 1% of raw leads - the high end of the study results.  I need 100 leads to close 1 sale.  25 leads in 6 months means that I need 24 months of leadgen with Realtor.com to generate 100 leads.

24 months at $500/month = a $12,000 ad spend to generate $7,000 in net commission.  

If I close at 0.5% of raw leads (the low end of the study results), I'd need to spend $24,000 to generate that same $7,000 in commission.

To break even, I'd need to close 1.71% of leads, which sounds good if you say it fast, but with measured numbers suggesting 0.5% to 1%, seems unrealistic. 

Using the study's median close rate of 0.75%, I'd have to improve my close ratio by a factor of 2.28 just to break even on the ad spend!

The major problem I have with the likes of ZTR is that they put these great sales pitches on, and if everything works the way that they say it will (5% conversion), then I win and they win.

But if - as research suggests - things don't work out the way they suggest, then I lose - but they still win.  I take 100% of the risk and they have nothing to lose. 

If one of them would offer a risk-sharing leadgen program, I'd listen, but short of that, I am about done with these snake oil salesmen and their "programs".

PS - for many of the lower cost ZTR programs, don't forget that the same lead goes out to 3 or more realtors at the same time. No wonder the REAL conversion rates are so awful.