Does A Real Estate Open House Work?
Do real estate open houses work to sell a home? When you are trying to sell your home, it is natural to pull out all the stops. It may be the biggest sale of your life, and you want to do everything you can to make it happen. This may mean renovations, hiring a reputable realtor and maybe even a public open house. But, you should be aware that when it comes to putting on a public open house, you might be wasting your time. With less than 2% of homes selling from public houses nationwide, the efforts of you and your Realtor may be better spent elsewhere. Yes you read that correctly a mere 2 percent of all homes are due to a public open house!
On any given weekend, you can probably drive around the surrounding neighborhoods and discover numerous open houses. Some Realtors make putting on a Real Estate open house part of their selling strategy and many sellers are glad to jump on board with any effort that may help sell their home. If you spend some time in these open houses, though, you will eventually realize that most of the people walking through the door are anything but targeted buyers.
If you are lucky a Real Estate open house draws lookers, but often they are the wrong type. Some of these may include:
- Your Neighbors – You may love your neighbors, or you may have never spoken two words to them. Either way, you can expect your open house to draw them in. They are probably curious to see how you live and perhaps to compare their homes with yours. Your open house also offers up an extremely convenient diversion on a lazy Sunday. They are not prospective buyers, but an open door is too hard to resist – especially when it’s right across the street. Real Estate open houses are notorious for having the busy bee in your neighborhood stop by.
- The Dreamer – The fact that your home is listed for $500,000 does not mean the people walking through the door can afford this amount. Because there is no pressure to buy, or any screening process, many of the people who come to look will not have the finances to afford your home. Everyone has the right to dream of a nicer, bigger, better home, and your open house gives them the chance to do just that. If you don’t mind unqualified buyers strolling around your place then by all means have an open house but be forewarned you can expect these people to show up.
- The Burglar – Every open house may not draw in potential criminals, but you should be aware that leaving your home open all day to strangers could attract burglars. If you are lucky and the open house has decent attendance your Realtor is not going to be able to watch every person at all times. It creates a ripe environment for someone to lift some of your valuables. Additionally it also allows people to look around your home unsupervised and to devise the best way into your home when nobody is there. If you do hold an open house, make sure to make thorough inspection of your home after it is over to ensure all possible entrances are secure.
- The Idea Person – This person is on the hunt for ideas for his or her own home. Your counter tops, bathroom designs and paint choices are all collected for future home renovation ideas. The more expensive your home, the more likely this person is to show up. They may even pretend there is interest in the home. The idea person loves visiting a Real Estate open house!
- The Professional Looker – Much like the garage or yard sale shopper, this person spends many Sundays out looking at houses. Homes are interesting, and it is a free way to do something fun. Your “Open House” sign will draw these people in without fail. These guys may tell you right away they are not looking for a home but saw the sign and thought they would just come in and take look.
Who Benefits From An Open House?
The real benefits of an open house are for your real estate agent. This of course is something that many Realtors will categorically deny. They may even tell you at the listing interview that a public open house is a big part of their marketing activities. Real Estate agents that talk up open houses want you to believe they are necessary. They will try to convince you that if you don’t have them your home will not be selling any time soon. Don’t believe it!
While it is possible that a buyer will swing by your house on a Sunday and realize it is perfect, the odds are not in favor of this happening. Most of the time the open house is more of an opportunity for your Realtor to drum up potential business. Some of the benefits to your Realtor include:
- Meet the Neighbors – Being a successful Realtor requires making connections, and an open house is a potential place to do this. There is a very good chance your neighbors will stop by for a chat, and this allows the Realtor to establish rapport with them. When they want to sell in the future, your Realtor will be one of the people they might possibly consider, especially if a connection is made.
- Meet Buyers – Just because the unqualified buyers that come into your home cannot afford your property does not mean they are not potential buyers of other properties. The Realtor is probably selling multiple homes, one of which could be a good fit for the visitors to your open house. While selling your home is unlikely, an open house is the perfect prospecting activity for a Realtor.
- Look Busy – Many of the things a Realtor does to sell a house happen behind the scenes. Real Estate open houses are one way for a Realtor to look like he or she is working hard for the seller. You see how much time your Realtor spends prepping your home and talking to those that come through the house, and you feel better about paying them for their work.
Quite honestly there are also some weak agents that just don’t know how to explain in person what I am telling you about open houses quite openly and honestly right now. There are many Real Estate agents who will agree to do an open house for fear that if they say NO, you will hire a different Realtor instead. Sad but true! An exceptional Realtor who sells a ton of homes will never give you this advice.
In fact, I will go out on a limb and tell you there are very few Realtors who have ever sold triple digit homes in a year who have open houses as a marketing strategy. There are far more productive things an agent can do than wasting this kind of time on a Sunday afternoon.
When conducting a listing interview with a potential seller client I explain right up front about open houses and the expectations of results they deliver. I also explain that I do not personally provide this service. If a seller can not be convinced it is not necessary and really wants one there are usually a few agents who will be happy to oblige.
After all there are agents who have very little clientele and need open house opportunities to drum up business. Does a Real Estate open house sound like they work so far? Hopefully you are realizing by now that an open house is completely unnecessary to sell a home!
Why Real Estate Companies Push Open Houses
Do you often wonder why you so see many open house signs all around town on a Sunday afternoon? There is one word that will answer that question for you. It’s call BRANDING! Real Estate companies love to push their agents to do open houses. If you own a Century 21, Coldwell Banker or any other real estate company for that matter, who wouldn’t want to have free advertising splattered all over town? There are plenty of people that will hire a company to do business with just because they have seen their signs. The hiring of the company doesn’t necessarily take place immediately but over time if a sign become engrained in your mind you may end up calling them.
The owner of the real estate company can be doing his or her own thing on a Sunday while an army of agents are out promoting the company name via an open house. It makes little difference if the home sells that day or not. An open house creates a perception that the company is “working for you.” Keep in mind that the whole point is whether or not an open house is necessary to sell your home not whether the agents needs to be showing you they are doing something for the money they earn. I can think of a lot better marketing activities than sitting in an open house for 2-3 hours on a Sunday.
A Couple of Exceptions To The Open Home Rule
Builders Showcasing Their Product
There is one circumstance where having regular open houses does make sense and that is a builder showcasing his product in a new development. Having Real Estate open houses for a builder is different than trying to sell a re-sale property because the builder needs to showcase their designs, options and the level of quality in their product.
Builders quite often have “model homes” where as a buyer you can walk through and see what the builder offers. Typically you will be able to see the different models he can build for you for X amount of dollars, along with all the including options and any upgrades that are offered.
A public open house is the perfect way of doing this. A large number of people are able to walk through and there are generally far less security issues as most of the contents in the home are just larger pieces of furniture and not the type of items someone scoping the joint would be looking to heist.
Hot Sellers Market
Another potential strategy where a public open house can benefit a seller is when you are in an extreme sellers market. If your local Multiple Listing (MLS) board allows it one of the better strategies you can employ is to list a home for sale at the beginning of the week.
In the showing instructions you let everyone know that the home can not be viewed until the open house on Sunday. What does this do for a seller? It creates a situation that is ripe for a bidding war.
By listing the home early in the week all the buyers who are actively looking and would otherwise be scheduling showings with their agent are not able to see the home until the open house. The home gets exposure and the excitement builds until everyone can view the home all at once on Sunday. Of course when the market is really hot and there are tons of people trampling over one another in the house, it sets up the perfect condition for a seller who in many circumstances will receive multiple offers. Will this work in a buyer’s market – not so much.
Does having an open house make it convenient for a buyer to look at homes? Sure without question. The looker/buyer does not have to call a Realtor and schedule an appointment. Open houses create a situation where buyers can go at their leisure during a specified window of time. Some buyers who are in the early stages of looking may feel like they don’t want to waste a Real Estate agents time. Some buyers who are in the early stages of looking may not be comfortable committing to working with a specific Realtor either. The open house allows them to look at homes in a non committal fashion.
For Sale By Owner
Another circumstance where an open house may be of benefit is when a seller has opted to try to sell their home as a for sale by owner property. While going For sale by owner is typically not the best way to sell a home, there are some that can not afford to pay a Realtor. For some sellers who are not around during the week for regular scheduled showing an open house allows them a better opportunity to get foot traffic through the home. There are probably a few Realtors snickering right now, as they know this is the kiss of death – Going for sale by owner and then to top it off not making it convenient for a buyer to look at the property.
Real Estate Open Houses Are Rarely Necessary
The bottom line is you do not need to have an open house to sell a home. The reality of an open house is that almost all of the benefits go to the Realtor, and few to the seller. There is always an off chance that the open house will result in a sale, but it is not likely. Much of what makes a home sell for a good price happens behind the scenes, and is what keeps a good Realtor putting in so much work for his or her clients.
Far more important than the promise of an open house is the reputation of your real estate agent. You can hold an open house or not, but it is more important to focus on the number of sales your agent completes each year, and how he or she is viewed in the industry. A good agent knows how to sell homes and is someone you can trust, even if you do not see what he or she does on a day-to-day basis.
The biggest take home message about real estate open houses is this – It is really silly to think that a ready willing and able buyer is going pass up scheduling a showing with a Realtor on your property if they are really interested in seeing it!
Folks don’t ever be foolish enough to believe that a buyer who is in the market to buy a home is going to say to themselves “if they don’t have an open house this weekend I am buying elsewhere!” Hard to believe right? That’s because it doesn’t work that way. Do real estate open houses sell homes? Hopefully by now you have figured out the answer is very rarely!
Other Real Estate Open House Resources:
- Is an open house a waste of time? by MSN Real Estate. Most of the opinions expressed say that real estate open houses do not work.
- Realtors that think open house do work by Realtor Magazine. See some example of how to improve open house results if you do give it a go.
About the author: The above Real Estate information on do Real Estate open houses work to sell homes was provided by Bill Gassett, a Nationally recognized leader in his field. Bill can be reached via email at firstname.lastname@example.org or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 27+ Years.
Thinking of selling your home? I have a passion for Real Estate and love to share my marketing expertise!
I service Real Estate sales in the following Metrowest MA towns: Ashland, Bellingham, Douglas, Framingham, Franklin, Grafton, Holliston, Hopkinton, Hopedale, Medway, Mendon, Milford, Millbury, Millville, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton and Uxbridge MA.