Are Open Houses Effective For Sellers?
Are open houses worth it for sellers? Is an open house effective for getting a home sold?
Depending on who you speak with, you will likely get a different answer.
When 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 local Realtor, and maybe even a public open house. But you should be aware that you might be wasting your time when it comes to putting on a public open house.
With less than 2% of homes selling from open houses nationwide, you and your Realtor’s efforts may be better spent elsewhere.
You read that correctly; a measly 2 percent of all homes are due to a public open house!
Do open houses sell homes? Absolutely not! Buyers who are serious about purchasing a home will schedule a showing with a real estate agent.
What is an Open House?
An open house, a staple of real estate marketing for some agents, is a method for increasing the visibility of a property. It offers interested parties an opportunity to view it in person at set times, typically during a weekend.
Usually, the listing agent or one of their associates will be present to answer potential buyer questions about the property. An open house sign-in sheet is provided that visitors are asked to sign.
The open house sign-in sheet allows real estate agents to get contact information for potential prospects. Many real estate agents will tell sellers it is used to collect feedback, but more likely, it’s used to nail down clients for other properties.
On any given weekend, you can probably drive around the surrounding neighborhoods and discover numerous open houses.
Searching for open houses near me on Google will provide even more potential properties to visit.
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, you will eventually realize that most 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. Are open houses worth it? You’ll likely come to a reasonable conclusion when you realize who will attend.
Who Can You Expect to Attend an Open House?
Let’s examine who you can plan to see at an open house.
Your Neighbors
You may love your neighbors or 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 offers an incredibly 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
You don’t need a mortgage preapproval to attend an open house. That’s right, you can expect anyone to attend the open house, whether qualified to purchase or not.
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 people who come to look will not have the finances to afford your home.
Everyone has the right to dream of a more luxurious, bigger, better home, and your open house allows them 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 will not be able to watch every person at all times.
It creates a ripe environment for someone to lift some of your valuables.
Additionally, it allows people to look around your home unsupervised and devise the best way into your home when nobody is there.
If you hold an open house, make sure to thoroughly inspect 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 their home. Your countertops, 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! When you are selling luxury real estate, you can expect many of these “fake buyers.”
The Professional Looker
Much like the garage or yard sale shopper, this person spends many Sundays looking at houses. Homes can be impressive, 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 a look.
Buyers Just Starting Their Search
There will also be potential buyers who have just started their search. They are not in a position to buy yet. However, visiting open houses allows them to look at houses without calling in a real estate agent.
Usually, these prospects are months away from buying a home. Sometimes they have a house to sell and cannot purchase without selling their home first. In other words, they are not in a position to buy as it is unlikely anyone will accept a home sale contingency.
A Genuine Real Buyer
While many people visiting open houses don’t belong, you can have genuine buyers show up too. The most vital point to take in is that these “real buyers” would schedule a showing if there was no open house.
Real estate agents fail to mention this when they want to make your home their office for the weekend. A prospecting extravaganza!
So when people ask, are open houses worth it? My answer is always the same – they are entirely unnecessary to sell a home. An open house is a waste of time for sellers.
Who Benefits From An Open House?
The real advantages 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 worth it.
They will try to convince you that your home will not sell anytime soon if you don’t have them. Please don’t buy it!
While a buyer may swing by your house on a Sunday and realize it is perfect, the odds of this happening are dramatically low.
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:
Meeting The Neighbors
Being a successful Realtor requires making connections, and an open house is a potential place to do this.
There is an excellent chance your neighbors will stop by for a chat, allowing 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 consider, especially if a connection is made.
Meet Buyer Prospects For Other Properties
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 an excellent 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. Open houses are worth it for them, not you!
The Real Estate Can Attempt to Look Busy
Many things a Realtor does to sell a home happen behind the scenes. Real Estate open houses are one way for a Realtor to look like they are 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, some weak agents don’t know how to explain in person what I am telling you about open houses quite openly and honestly right now.
Many Real Estate agents will agree to do an open house for fear that if they say NO, a seller will hire a different Realtor instead. Sad but true!
An exceptional Realtor who sells many homes will never give you this advice.
I will go out on a limb and tell you there are very few licensed 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 time on a Sunday afternoon.
When conducting a listing interview with a potential seller client, I immediately explain open houses and the expected results they deliver. I also explain that I do not personally provide this service.
If a seller cannot be convinced it is unnecessary and wants one, a few agents will usually be happy to oblige.
After all, some agents have very little clientele and need open-house opportunities to drum up business. Does a Real Estate open house sound worth it to you?
Why Real Estate Companies Push Open Houses
Do you often wonder why you see many open house signs around town on a Sunday afternoon? There is one word that will answer that question for you. It’s called 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, who wouldn’t want to have free advertising splattered all over town?
Plenty of people will hire a company to do business with just because they have seen their signs. The company’s hiring doesn’t necessarily take place immediately, but over time if a sign becomes ingrained in your mind, you may call them.
The real estate company owner can do their own thing on a Sunday while an army of agents promotes the business 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 need to show you they are doing something for the money they earn.
I can think of many better marketing activities than sitting in an open house for 2-3 hours on a Sunday.
A Couple of Exceptions To Open Houses Being Worth It
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 from selling a resale property because the builder needs to showcase their designs, options, and the level of quality in their product.
Builders often have “model homes,” where buyers can walk through and see what the builder offers. When you buy new construction, you will see the different models they can build for you for X amount of dollars, along with all the options and upgrades offered.
A public open house is a perfect way of doing this. A large number of people can walk through, and there are fewer security issues as most of the contents in the home are just more substantial pieces of furniture and not the type of items someone scoping the joint would be looking to heist.
A Hot Seller’s Market
Another potential strategy where a public open house can benefit a seller is when you are in an extreme seller’s market with properties going pending quickly.
If your local Multiple Listing (MLS) boards allow 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 cannot be viewed until the open house on Sunday. What does this do for a seller? It creates a situation that is ripe for creating 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 cannot see the home until the open house. The house gets exposed, and the excitement builds until everyone can view the home on Sunday.
Of course, when the market is scorching, and many people are 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.
There is, however, a better way of doing this, called delayed showings. It accomplishes the same thing, but a real estate agent will vet all the buyers going through your home.
Open Houses Are Convenient For Buyers
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 potential customers can go at their leisure during a specified time window.
In the initial stages of looking, some buyers may feel like they don’t want to waste a Real Estate agent’s time. Some buyers in the early stages of looking may not be comfortable committing to working with a particular Realtor.
The open house allows them to look at homes in a noncommittal fashion.
Open Houses For Sale By Owner
Another circumstance where an open house may 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, some can not afford to pay a Realtor.
For some sellers who are not around for regularly scheduled showings during the week, 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 the 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 Worth It
The bottom line is you do not need 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 reasonable price happens behind the scenes and keeps good Realtors putting in so much work for their 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 they are 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 they do daily.
Final Thoughts
The most crucial take-home message about real estate open houses is this. It is ridiculous to think that a ready, willing, and able buyer will pass up scheduling a showing with a Realtor on your property if they are interested in seeing it!
Folks don’t ever be foolish enough to believe that a buyer 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!” Difficult to believe, right? That’s because it doesn’t work that way.
About the author: Bill Gassett, a nationally recognized leader in his field, provided the above Real Estate information on whether open houses are worth it. Bill can be reached via email at billgassett@remaxexec.com or by phone at 508-625-0191. Bill has helped people move in and out of many Metrowest towns for the last 37+ Years.
Are you thinking of selling your home? I am passionate about real estate and love sharing 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, Natick, Northborough, Northbridge, Shrewsbury, Southborough, Sutton, Wayland, Westborough, Whitinsville, Worcester, Upton, and Uxbridge MA.
