If you went on a deep sea fishing trip aboard a high-tech vessel with a state-of-the-art fish finder, what do you think would be the most effective way to spend your day finding the fish?
Just stopping at various locations, dropping in your fishing line and hoping some fish are there? Or using the fish finder to locate the fish and then drop your line?
All I can say is that any commercial fisherman who uses the first option is probably out of business.
Granted, you can definitely get lucky once in a while with that option, but why spend all that time and energy when the results cannot be scientifically duplicated?
Open houses are similar. They are becoming more ineffective and outdated, and eventually they will become extinct.
Let me explain why:
- Technology: Most buyers go to the Internet first. They don’t need to drive around to find open houses. Most of the time buyers attending open houses are doing so because their agents are busy getting more leads while you are wasting your time showing their clients property.
- Safety: Let’s face it, the world isn’t becoming a safer place. In fact, many criminals use open houses to stage potential victims.
- Evolution: Open houses were great when there was no Internet. Many agents are still using outdated techniques. As the demographics of real estate professionals, buyers and sellers change, those old techniques will become less and less common.
- Sellers: It is not in the seller’s best interests. An open house is not needed to sell a home; it will still sell even if you don’t have one.
However, open houses are not to be ignored entirely. Although the logic is sound, one might still decide to use this as a sales strategy depending on the current supply and demand in the market.
For example, if the market is experiencing low interest rates (very high demand) and low inventory (very low supply), the perfect storm is created for a seller to (more or less) dictate pricing.
Anytime one has a scarcity available and an audience who wants it, there is a control shift. This is where an open house can be used as a platform to drive your audience to one specific property with a finite timeframe.
Rather than opening up showings to the general public all at once, an agent can direct where the demand will be to simultaneously create the physical perception of higher demand and more urgency for more serious offers. Here’s how:
List the property publicly on the MLS on a Wednesday with the first available showing to be the upcoming weekend at the open house. This will target all of your “hot” buyers actively working with an agent.
Roll out all of your marketing efforts by Friday and syndicate the listing to all major sites such as Zillow, realtor.com, Trulia and so on. This will be exposed to all “warm” buyers who are window-shopping online.
Hold the open house that Saturday or Sunday (not both) for a one- or two-hour time slot only. The more people you can direct to a property and have looking at the same time, the more likely you are to receive the most offers — and, subsequently, highest price. You are leveraging the demand.
Open houses are often being misused and must be executed carefully and effectively. Otherwise, skip the whole dog-and-pony show altogether.