One question I get over and over again from loan officers is "Are internet leads a good source for new business?" My answer always is "Well, yes and no. Proceed with caution and please be careful."

What I about to share with you today, is the REAL truth about internet leads, and something no one else in the industry is talking about. You won't hear this information anywhere else! It's one of the most hidden aspects of mortgage marketing.

Yes, internet leads are a great source for new business. They put you in touch with people whom you may have never been in contact with otherwise, and they enable you to sell loans beyond your local marketplace.

There are only so many networking groups, realtor offices, and industry events you can handle. So, in terms of an efficient use of time, internet leads are a great way to have a pile of ready-interested consumers looking to buy now.

Internet leads, are people who have eagerly searched for information, filled-out a lead form, and raised their hand, saying "I want the lowest rate I can find, show me what you've got, please call or email me!". In theory, these leads should be pretty easy to close. Yes, in theory-but not in reality. Let me explain...

Here's where internet leads go wrong and why you should be extra careful about buying them:

* Not all internet leads are created equal. Some lead companies don't generate the leads they sell. They may purchase leads from outside third parties and sell them as their own under their own name. So you are really buying leads from another source, not the one you are buying from.

* Many lead companies don't work exclusively in the mortgage industry; they may sell leads from many industries such as financial planning, credit cards, real estate, etc. How do you know that the leads you are buying are specific to a person wanting to get a mortgage?

* Many of the internet leads are not properly qualified. Before you spend money on leads, make sure that the prospects have been vetted and are legitimate actual buyers. Also, you don't want to deal with all poor credit or bankruptcy leads.

* Be careful of which lead companies you deal with. The mortgage refinance boom generated a lot of ancillary businesses, including a boom in mortgage marketing companies. I've been tracking them for years, and my initial list of 18 lead companies has mushroomed into a list of hundreds with new ones popping up left and right.

* Don't invest too much money upfront in buying leads. Lead companies usually charge $25 to $40 a piece for the day-old "fresh" leads, and many have a minimum purchase amount usually in the $2,000 to $3,000 range to start. That is a lot of upfront capital and risk you are taking for leads that may or may not produce any business for you.

* Look at the prospect website the company uses to generate the actual lead itself. You will want to know how the customer finds the site, and what methods the lead company uses to entice them to fill-out the form. If they are giving away free merchandise or some other bribe, then you don't want those leads. Obviously, the person just wants the prize and not necessarily the mortgage. Anyone can fill-out a form.

* Consider the fields and information the lead form is collecting. Will this information help you in identifying and selling the loan to the prospect? If the lead form is short and doesn't have all the loan information you need, it means more work for you. You will have to chase people down that aren't properly qualified and will waste time on leads that go nowhere.

* Many internet leads you buy from lead companies are "recycled". Here's what happens...a loan officer buys a batch of leads from a lead company and spends $2,500 on them. He works those leads hard, calls them all, and finds out that the customers aren't interested, have already gotten a mortgage, or are just playing games. Bottom line--he is out the $2,500 and has no loans to show for his "investment". So what does he do? He simply bundles up those bogus leads, finds a lead provider that buys outside third-party leads. He then re-sells them to the new lead company as leftover prospects he "didn't have time to call", or they are from "out of state" and "couldn't be used". The new lead buys up the batch, calls them "fresh leads just in today", and sells them to YOU, the unsuspecting loan officer. And the cycle repeats. You can see why internet lead providers have a bad reputation. Now you know why. And, I can't believe that no one else is the industry, except Sink or Swim, is talking about this!

* The best internet leads are the ones you generate yourself using your own marketing methods and tactics. That way, you know they are actual fresh leads, and you can control the type of customers you deal with. See my lead site at http://www.findthelowestrate.com for an example of the site I used myself to generate my own leads when I originated loans fulltime (before getting into mortgage training and consulting). We also now build these sites for clients and I teach people how to use my methods to create their own internet leads instead of buying them from lead companies. If you are looking for a new lead source, it may be something to consider.

* Remember, internet leads must be approached differently, because they are a different kind of customer.

* Understand that internet leads are not a magic solution to your origination woes. If you don't know how to sell and close a loan, it doesn't matter how many leads you have. Focus on the basics first and become an expert in your craft, and don't waste money on good leads until you can sell a loan to the bad leads. You should internet leads as another pillar of your marketing plan, and not put all your eggs into one basket.

I hope this article helps you in evaluating new internet lead sources. Yes, they can be a great way to generate additional business, but proceed cautiously and know who you are dealing with. I don't want to scare you into never buying an internet lead, because they are excellent source for new loan officers who need to generate loans fast. If purchased wisely, these types of leads, can put you in touch with active customers who are eager and ready to buy. Whatever lead source you choose, be sure to do your homework upfront and follow my lead buying tips above.

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