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Editor’s note: The following is a user-contributed article on InmanWiki, an online real estate encyclopedia launched by Inman News. This piece shows how industry experts can strut their stuff on the wiki and contribute solid articles with useful information for consumers and professionals alike. After logging in, readers can go to articles on InmanWiki and click on the “Discussion” tab to add comments or “Edit” to make changes. To get started creating your own articles on InmanWiki, simply go to the home page at www.inmanwiki.com and follow the steps under “Participate.”
The Open House has been a mainstay of real estate sales for many years. The house to be sold is cleaned up, painted, landscaped, primped and polished to a spit-shine. Agents produce flyers listing features and benefits, put cookies in the oven to make the place smell “home-like,” and engage all the potential buyers who walk through. The buyers are enthralled by the home and write full price offers on the spot. A contract for sale is signed, a “Sale Pending” rider is placed on the yard sign post outside, and off to escrow we go. Such is the typical scenario sellers hope for when they ask their agents to hold an open house. Let’s take a closer look at the reality.
Who comes to open houses? Buyers who come to an open house may be unrepresented by an agent. They are a prime target for the agent. Sellers come to an open house to see how agents market homes. They are also prime targets for the agent. Friends and neighbors stop by to see what was done to the house. Other “Looky Lous” stop by because attending open houses is their hobby. They have no intention of purchasing; just looking at the house is fun for them. Others come by with less than honorable intentions.
Open Houses are really a tool for agents to find clients.
The probability of selling due to an open house is rather small. It does indeed occur, but not very often. If that is the case, what happens? Agents are there to try to capture the people who want to buy. Most of the time, visitors rule out the specific house for one reason or another. The onsite agent’s job is to capture and convert that buyer to another home if they have no interest in the open home. No conversion, no commission.
Agents will try to qualify visitors to determine if they are buyers, sellers, or both; the time frame of the sale/purchase under consideration, and if the visitor is already working with or loyal to another agent. Buyers/sellers, aware they will be subjected to these friendly queries, put up barriers so they can view the house with the least amount of disturbance by the agent lurking in the kitchen.
One of the major problems with an open house in the 21st Century is that it is a passive activity for the agent: Once the house is open, the agent must stay at the location and wait for prospects to arrive. The number and quality of prospective visitors is unpredictable.
Agents should use active prospecting techniques to drive traffic to the open house: invitation cards and door-knocking around the neighborhood; cold-calling the neighbors to invite them to view the home, calling the agent’s buyers and sphere of influence. These techniques are much more effective for the agent than advertisements in local newspapers. Advertising online is supplanting newspapers. There are a plethora of Web sites vying for posting of listings, including Realtor.com, Google Base, Zillow, Trulia, and new ones pop up daily. Some of these sites want to remove the agent from the process and, as a consequence, provide little incentive for agents to post there.
So, why do sellers want their agent to have open house? Mostly, because their agent has not shared with them the low probability of their home selling through this marketing method. Holding an open house on Sunday is the slowest method of selling a home on the slowest real estate sales day of the week. Sellers are much better served by an agent who will actively search for a buyer using prospecting techniques and posting listings on high traffic Web sites along with virtual tours. The majority of qualified buyers have an agent who can arrange for house showings as needed.
Open houses may never go away, due to tradition, but their usefulness as a sales tool is diminished in the online world of the 21st Century.