Lead Generation Pitfalls
Lead Generation Pitfalls
By: D. Keith Dunnagan, Esq. and Trey Van Dyke (2L)
November 16, 2021
According to research from Baylor University, real estate cold calls are answered 28% of the time and out of the total number of people spoken to, 1.7% become appointments or referrals.[1] On the other hand, “you miss 100% of the shots you don’t take!” – Michael Scott (quoting Wayne Gretzky). Although its effectiveness is hotly debated, cold calling remains a foundational business model for many successful real estate agents and brokerages. Federal and state lawmakers have tried to balance the needs of businesses to solicit new clients, with the needs of consumer privacy and protection from harassment.
Cold Calls
The Federal Trade Commission (FTC) and Federal Communications Commission (FCC) both regulate telemarketing on the federal level, and California has its own rules as well. No matter where the rules come from, agents want to avoid violations when conducting cold calls for sales leads. Cold calling is an unsolicited (not asked-for) solicitation (for sales) call. Problems arise when consumers have added their phone numbers to a national Do-Not-Call list that the FTC maintains and enforces. Real estate agents and their brokerages may be liable for violating these statutes and regulations if they call numbers on this list without consent. (47 C.F.R. § 64.1200). There are a few exceptions though:
1) You have written permission (C.A.R. Form CFC, for example)
2) An established business relationship exists. Think 18:3. Meaning you have been involved in a transaction with them within 18 months or they have requested information from you within 3 months.
3) A personal relationship. This pretty much means what the parties want it to mean: family, friends, acquaintances… some may draw the line at who sends holiday cards and who doesn’t. Got to get on those cards!
4) If the call was by mistake, and the company has written procedures, training, and maintains their own Do-Not-Call database.
Brokers should implement a program to train new hires and current staff on the rules and procedures of cold calls, and the broker should maintain and update a local DNC list that is accessible to the staff making these calls. Further, brokers should read the terms and conditions of any third-party calling services (we’re looking at you REDEX, Mojo, and LandVoice!) to make sure that there are procedures and safeguards in place to prevent violations.
Unlicensed Inside Sales
Unlicensed assistants can be a great addition to a lead generation system, by connecting licensed agents with new clientele. BUT BE CAREFUL! These assistants may assist in the performance of warm/cold calling prospects through phone calls, emails, or social media to canvass for interest in using real estate services generally. If there is an interest, the assistant must refer the call directly to or schedule an appointment with a licensed real estate agent. Additionally, unlicensed and licensed assistants who are classified as clerical users under local MLS rules may not discuss any MLS information with the public. Unlicensed assistants may not attempt to induce a prospect to use any real estate services nor discuss the specific real estate needs of the prospect.
Unlicensed assistants may: prospect via phone, email, social media, etc to canvass for general interest… then directly refer to a licensee or schedule an appointment with one.
Unlicensed assistants may not: attempt to induce a prospect, discuss specific real estate needs, or discuss any MLS information.
Brokers allowing these activities to occur may be subject to license suspension in violation of the Business and Professions Code Section 10177(h) (failure of broker to supervise). Therefore, Brokers should have an office policy determining who is allowed to hire unlicensed assistants and how they should operate. Ultimately, the real estate broker is responsible for the supervision and control of all the activities conducted by salespersons and employees, including unlicensed assistants.
“Don’t ever, for any reason, do anything to anyone, for any reason, ever, no matter what.”
– Michael Scott
If agents choose to use these business practices, they should sufficiently understand the risks and liabilities involved to navigate them successfully. Brokers should take a proactive approach to establishing written policies on cold calling and inside sales, and make sure to train their employees regularly to avoid potential career-ending penalties to their license and business.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
[1] “Has Cold Calling Gone Cold?” By Dale Lampertz. The Keller Center Research Report. Baylor University. 2012 https://www.baylor.edu/business/kellercenter/doc.php/194525.pdf
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Lead Generation Pitfalls
By: D. Keith Dunnagan, Esq. and Trey Van Dyke (2L)
November 16, 2021
According to research from Baylor University, real estate cold calls are answered 28% of the time and out of the total number of people spoken to, 1.7% become appointments or referrals.[1] On the other hand, “you miss 100% of the shots you don’t take!” – Michael Scott (quoting Wayne Gretzky). Although its effectiveness is hotly debated, cold calling remains a foundational business model for many successful real estate agents and brokerages. Federal and state lawmakers have tried to balance the needs of businesses to solicit new clients, with the needs of consumer privacy and protection from harassment.
Cold Calls
The Federal Trade Commission (FTC) and Federal Communications Commission (FCC) both regulate telemarketing on the federal level, and California has its own rules as well. No matter where the rules come from, agents want to avoid violations when conducting cold calls for sales leads. Cold calling is an unsolicited (not asked-for) solicitation (for sales) call. Problems arise when consumers have added their phone numbers to a national Do-Not-Call list that the FTC maintains and enforces. Real estate agents and their brokerages may be liable for violating these statutes and regulations if they call numbers on this list without consent. (47 C.F.R. § 64.1200). There are a few exceptions though:
1) You have written permission (C.A.R. Form CFC, for example)
2) An established business relationship exists. Think 18:3. Meaning you have been involved in a transaction with them within 18 months or they have requested information from you within 3 months.
3) A personal relationship. This pretty much means what the parties want it to mean: family, friends, acquaintances… some may draw the line at who sends holiday cards and who doesn’t. Got to get on those cards!
4) If the call was by mistake, and the company has written procedures, training, and maintains their own Do-Not-Call database.
Brokers should implement a program to train new hires and current staff on the rules and procedures of cold calls, and the broker should maintain and update a local DNC list that is accessible to the staff making these calls. Further, brokers should read the terms and conditions of any third-party calling services (we’re looking at you REDEX, Mojo, and LandVoice!) to make sure that there are procedures and safeguards in place to prevent violations.
Unlicensed Inside Sales
Unlicensed assistants can be a great addition to a lead generation system, by connecting licensed agents with new clientele. BUT BE CAREFUL! These assistants may assist in the performance of warm/cold calling prospects through phone calls, emails, or social media to canvass for interest in using real estate services generally. If there is an interest, the assistant must refer the call directly to or schedule an appointment with a licensed real estate agent. Additionally, unlicensed and licensed assistants who are classified as clerical users under local MLS rules may not discuss any MLS information with the public. Unlicensed assistants may not attempt to induce a prospect to use any real estate services nor discuss the specific real estate needs of the prospect.
Unlicensed assistants may: prospect via phone, email, social media, etc to canvass for general interest… then directly refer to a licensee or schedule an appointment with one.
Unlicensed assistants may not: attempt to induce a prospect, discuss specific real estate needs, or discuss any MLS information.
Brokers allowing these activities to occur may be subject to license suspension in violation of the Business and Professions Code Section 10177(h) (failure of broker to supervise). Therefore, Brokers should have an office policy determining who is allowed to hire unlicensed assistants and how they should operate. Ultimately, the real estate broker is responsible for the supervision and control of all the activities conducted by salespersons and employees, including unlicensed assistants.
“Don’t ever, for any reason, do anything to anyone, for any reason, ever, no matter what.”
– Michael Scott
If agents choose to use these business practices, they should sufficiently understand the risks and liabilities involved to navigate them successfully. Brokers should take a proactive approach to establishing written policies on cold calling and inside sales, and make sure to train their employees regularly to avoid potential career-ending penalties to their license and business.
The information presented in this Article is not to be taken as legal advice. Every person’s situation is different. If you are facing a legal issue of any kind, get competent legal advice in your State immediately so that you can determine your best options.
[1] “Has Cold Calling Gone Cold?” By Dale Lampertz. The Keller Center Research Report. Baylor University. 2012 https://www.baylor.edu/business/kellercenter/doc.php/194525.pdf
Recent and Popular Articles From Our Blog:
2020 Blogs:
- April 28 – A New Reality – Temporary or Permanent – Virtual Showings and Disclosures
- May 22 – Servant Leadership
- June 8 – Paycheck Protection Program Flexibility Act is Enacted
- June 10 – Impact to Credit Score After Filing Chapter 7 Bankruptcy
- June 26 – SBA Rolls Out Updated PPP Loan Forgiveness Application
- July 2 – Understanding the Home Equity Sales Contract Act 2020
- July 14 – Governor Rolls Back Re-Opening
- August 4 – August 2020 COVID-19 Update
- August 18 – Status Of Selected California State Operations re: COVID-19
- September 1 – COVID Update on Foreclosures and Evictions
- September 3 – State Passes AB 3088
- September 15 – Update on PPP Forgiveness and Impacts
- November 10 – Changes to the Fair Housing and Discrimination Advisory CAR Form
- November 24 – In a Season of Difficulty – We Choose Gratitude
- December 15 – Cal/OSHA Issues New COVID Prevention Rule
2021 Blogs:
- January 5 – Introduction to New Laws 2021
- January 26- Rain and the Prevalence of Failure to Disclose Claims
- February 2 – California Enacts COVID Tenant Relief Act (SB 91)
- March 9 – Understanding the Trust Exception to Real Estate Disclosures
- April 20 – Cash for Keys and SB 91
- May 4 – Help! Tenant Won’t Cooperate with Sale of Home
- May 11 – California Passes AB 80