@Eli Rose In a fresh campaign for motivated seller leads, I've seen 7.5% conversion rates (100 clicks, generating 7.5 leads). At around $25/click average, that's $2500 for 100 clicks, generating 7.5 leads, or ($2500/7.5) $357 cost per lead. So, it can be 14:1 from the outset.
I see an 80/20 rule with leads and phone calls. 20 calls, 80 leads filled out. So, can't stress the importance of using call tracking plugged into Adwords.
As of late, I'm seeing campaigns hitting 8:1 ratio click to conversion. But these are search-only campaigns. Remarketing converts a bit worse, but the cost for those clicks is cheaper, so while a remarketing campaign may have a lower click to conversion ratio, if the clicks are cheaper, then you'll get a better ROI.
So, I could get a .17 cost per view on Youtube, or .25 cost per remarketing click, or a $25/click search ad. With the price-per-interaction jumping all over the place, it's no longer apples to apples comparison when it comes to click-to-conversion ratio - you have to look at the cost per conversion.
My clients are doing 20+ home purchases per month, so the strategy I use for them is going to be different for someone looking to buy 1-2 houses per month, or less. Let's say you can get 1 out of every 10 motivated seller leads to sell you their house. Again, these are people typing 'i want out of my house right now' (paraphrased) into Google, not just someone with a messy lawn who hasn't considered selling until you approached them - they convert much higher than average. If you were not looking to grow your number of conversions every month, but simply whittle away at the 10 leads per month you need, I could see you getting a home purchased for under $1000 each. $80/lead at 10 leads per month is doable - you just have to keep cutting the fat out of the account until you get there.
When you're needing 20+ houses purchased each month, in order to find the volume, you venture into less profitable spaces, that take longer to whittle down.
From @Eli Rose: "The major lead service provider I am researching charges $140 to $170 per lead in my area. The leads they provide could be a traditional sale candidate or a distressed homeowner."
I have no experience with these - I'm not sure how to evaluate a mixture of traditional/distressed. Based on the term searched in Adwords, you can focus on terms that indicate distressed (sell my house fast, now, quick, etc). I have no idea what traditional sellers convert at - in terms of selling their home, or how far below market value you can get them. I come from internet marketing, not real estate - I'm learning the real estate side as I go.
So, the only way you'll know if the lead company leads are worth anything, is to purchase them at $140 - $170, and see if you can get a home purchased for every 7 leads you buy. That puts you under $1000 cost per home purchased, as compared to Adwords. I tend to doubt you'll get a home purchased ever 7 leads, but I have no experience with those providers. Maybe find the best salesman on Bigger Pockets, who uses one of these lead services, and find out what his close ratio is, that will at least give you the best case outcome.
One difference between the two, is once you find out your close ratio from the lead service provider, that number is not likely to fluctuate, and there's not much (that I'm aware of) that you can do to improve the quality of those leads. With Adwords, you can find out where every lead and call came from, and adjust to get less low quality leads, and more high quality leads.
And to respond to your comment about call tracking - I recommend Call Tracking Metrics (yes that's the name). I have no affiliation with them, just use the hell out of their service. You can record phone conversations to review later (of your self, or QA of your staff), and get unique number for about $1.50 per month, as many as you need, any area code you need. It's pretty amazing, and the script you need to add to your site is one simple script, as simple as adding analytics to your website.
