Are Open Houses Obsolete?
Okay, it wasn't THIS gorgeous, but I can't help but dream of spring...
Sitting at an open house in Portland, looking out on the most gorgeous day of the year (it’s only January 14th, so the bar was pretty low until now), has given me the inspiration to write a blog about open houses. This one has tips for both buyers and sellers.
What’s an open house and why would I need one?
Unless you’re from someplace far from here, like you grew up on a deserted island or something, you probably already know that an open house is when a Realtor hosts a home listed for sale open for viewing by the public.
There are a lot of articles floating around about how ineffective open houses are in the era of the internet. Most people find houses online, so why bother holding them open?
Because you know I’m data driven, here’s some stats:
The NAR (National Association of Realtors) found in a 2016 profile that 8 percent of buyers found the home they purchased from a yard sign or open house, but they didn’t split out the two sources. I found another site that claims that only 2 percent of purchases come from open houses. That writer concluded that open houses must be a waste of time, then.
I look at it a little different… even if the figure is as low as 2%, that’s still 2 out of 100 sales. Those 2 particular sales with those 2 particular buyers probably wouldn’t have happened without that open house. Yes, it might have sold anyway to someone else, but more offers often means a higher sold price.
Also, holding an open house might mean more offers, which often means a higher final sales price, even if the successful buyer didn't find the home through the open house.
I like money. I bet you like money. We should totally hang out (at an open house).
It’s also a lot easier to find open houses nowadays, so it’s hard to believe that open houses are less attended now than in the past! Back in the pre-internet era, the local newspaper was the only way to know ahead of time about an open house. Most people found them the old-fashioned way – by driving in random patterns around neighborhoods that looked cool until they happened across one (still totally fun, BTW).
Who are these buyers that purchase a home they found at an open house??
I’ve met buyers at open houses that ended up purchasing that home. In some cases they used me as their buyer’s agent. In other cases, they used an agent they already knew.
Open house detractors would say, “If the buyer already had an agent they would have ended up seeing the home anyway, so the open house was pointless!”
That logic might apply occasionally, but people that buy from seeing an open house aren't always represented, and even if they were, sometimes they just prefer to view homes through opens.
Amazingly enough, there are even cases where someone stops by an open house, falls in love, and decides to purchase it even though they were not at all in the market for a home.
Does it happen all the time? No. But these “impulse buyers” really are a thing.
Not that I'm comparing buying a home to picking up a pack of gum at the checkout stand... Okay, well, yes, I am comparing those.
And who doesn't like attending a bunch of open houses in the months before they are ready to buy? Many people then get used to looking at homes through open houses instead of through showings with an agent. As they become ready to buy, they often end up finding a home to purchase through an open house. Some of them already know an agent they use to buy the home, some are perfectly happy using the agent that held the house open.
I work with some buyers that view more homes through open houses than they do through showings with me. They just prefer to set their own schedules and go out on the weekends when they feel like it. Of course, I send them information on other homes for sale that meet their criteria that aren’t being held open, and if those homes look VERY promising, then we setup a showing… but, often, it’s a home they saw through an open house that they end up purchasing.
Buying a home is a really big decision. It makes sense that some people are reticent to “get serious” with an agent, even when they really are ready. You never know when "casual" lookers might find “the one” through an open house. I don’t want my sellers to miss out on those buyers!
In the end, there's no disputing that some buyers find the home they want to purchase through an open house. Why would a seller be against this source of marketing?
Why a seller would be against open houses
Your home can become a target. Protect yourself by removing valuables and talk to your Realtor about other ways to safeguard your property.
Yes, this is me answering my own objection. That’s the science of real estate in a nutshell.
There are some downsides to open houses for the seller. A bunch of strangers traipsing through your house, opening cabinets, peeking at your stuff, nosy neighbors, and the prospect of nefarious people scoping the place out for a potential robbery (or just snatching stuff while they’re there – make sure to lockup or remove valuables and prescriptions!).
It also means the house must be spotless and vacated for several hours on weekend days and pets need to be removed or otherwise managed.
In my experience, the sellers that prefer not to have open houses are against them primarily because of what they feel is an intrusion on their privacy. No one wants the creepy neighbor from down the street to rifle through their underwear drawer while the agent is busy speaking to someone else.
I can completely respect that, and I have no problem with marketing homes in other ways.
But, if you can secure your valuables and feel comfortable with Ms. Nosyneighbor snooping around a little, then, in many cases, open houses can really help sell your home.
Open houses are a great way to find a Realtor that will do an awesome job for you!
Never forget that you have the choice! Make a conscious decision about who you want to represent you. Buying or selling a home is a BIG project!
The Realtor your Aunt Betty recommended seems nice enough, but you just aren't sure if she's the right fit for you... then open houses are a great way to meet a Realtor that will crush it!
If you are thinking about buying in the next 2-12 months, then you're probably starting to look at a few open houses anyway. Even if you *think* you've got your Realtor picked out, pay attention to the people holding the open houses.
I've written a couple of blogs for buyers (like this one and this one) about preparing to buy a home. Choosing a Realtor features prominently (of course, I'm a Realtor and all). An open house isn't the time to interview a Realtor, but it's the perfect time to interact with one so that you can decide if they're worth interviewing later.
You can usually tell whether or not the Realtor wants your business, if they're a good listener and capable of asking questions, and their confidence level. You can also get a quick feel for their personality and temperament.
Is this someone you want to interact with regularly for months? Do they seem smart, organized, savvy about the market, and prepared for the open house? If so, they might be a good candidate to represent you. Maybe even better than Aunt Betty's Realtor.
The REAL purpose of an open house
This agent looks hungry. I'd have him hold an open house.
Selling your home is goal number one for an open house. But, let’s be real. There’s a reason that open houses are sometimes hosted by “junior” agents: they’re a decent source for buyer (and occasionally seller) leads.
Should you care that the agent holding your home open might pick up a lead or two? Of course not. You should WANT that hungry agent to hold the open house. That hungry agent will likely work hard to host a really good open house, hopefully with lots of information available to prospective buyers (and maybe even a few cookies).
Great agents that hold open houses do a lot more than open the door and stand around while people meander in and out.
How I hold an open house
Open house preparation for me means breaking out the microscope.
Here are just a few things I do to prepare for an open house:
Thoroughly research other homes on the market that would be considered the competition.
Print out lists of these competitive homes to show prospective buyers. This is a great way to point out the value proposition of the home I’m trying to sell versus others they would look at. This is important because one of the first things a LOT of people do when they walk into an open house is claim that it’s overpriced. In a market like ours (very little inventory), it’s difficult for prospective buyers, lookie-loos, and neighbors to keep up with pricing.
Thoroughly research recent pending and past sales. If the people attending the open house live in the area, they are likely to already be on top of that information. An agent should be able to speak intelligently with all types of prospective buyers: whether they are highly informed or just starting to get a feel for the market.
Research (or refresh my knowledge of) other details of the home, such as the HOA (rent caps, pet policies, what the dues cover, assessments, etc.), how long the current owners have been there, why they're selling, what upgrades have been done, how it compares to others in the neighborhood, schools and school ratings, crime stats, how much in rent it’s getting (if it’s a rental), how much in rent it might get (if it were to sell to an investor), walkscore.com stats, check county/city records, and more.
Bring some buyer packets. If a casual or first-time buyer falls in love with the home, it's good to be prepared with materials that will make them feel comfortable enough with the process to make an offer.
Bring booties, take off your shoes sign, open house signs, sign in sheet, business cards, speakers for music (depending on the property), towels for the many times that it is wet in Portland, etc.
In some cases, place door knockers announcing the open house if appropriate for the neighborhood.
In some cases, run a Facebook ad for the open house, announce on social media, and post on website.
Arrive very early to scope out best spots for open house signs, then a quick drive around the neighborhood to see if anything interesting going on.
Get the house ready by turning on all the lights, opening curtains/blinds/interior doors, check that everything is neat, etc.
Place open house signs and then get ready for all the traffic!
The other part of hosting a great open house is knowing how to relate to the people that stop by. Here’s a bit about my strategy (it is certainly flexible depending on how I “read” the people):
Always be standing when people walk in the door and cell phone put away!
Greet people warmly, introduce yourself, get out of their way, but be present to ask and answer questions so that you can get to know them a little.
Go over some listing details, point out a few special features of the property and/or neighborhood, offer flyer, etc.
Introduce ice-breaker questions (how long have they been looking, how does this compare to what they’re searching for, etc.).
Once the ice is broken, ask for feedback and ascertain interest level, talk more specifically about them and their search, and ask for contact info to follow up, or contact info for their Realtor if they already have one.
Depending on how things go, set a follow up appointment/phone call.
I know I’m missing a few things, but you get the idea.
So, wait a sec, how are you writing this blog while hosting an open house??
You caught me. I said always be standing and cell phone away (although, in my defense, I didn't say anything about laptops...).
But, seriously, I close my laptop and put everything away when I see/hear someone approaching the door. My open house attendees receive my FULL attention.
The minimum amount of time I like to hold an open is usually 3 hours. While I have held open houses that have had 25-30+ groups walk through, which presents the issue of giving everyone the attention they need, typically it’s more like 5-10 groups. There’s usually free time in between people stopping by.
Often people show up in waves, then there are big time gaps before the next group. I use this time to get work done, or write blogs, because blogging is definitely not work. It’s just pure, unadulterated fun. Okay, sometimes I’ll browse social media, or read some articles… or whip out some push ups.
What would you do with a block of uninterrupted time spent at someone else’s house? (Jigsaw puzzles and scrapbooking are a bad idea, just sayin'.)
