Imagine, if you will. Your vacant home has been sitting on the market for a month and a half with almost no showings. You notice open houses every weekend and wonder why your agent is not holding one. When you asked your otherwise successful agent why she is not holding an open house, she just blows you off and tells you, “Open houses don’t work,” and asks you to reduce your asking price. You aren’t sure if open houses don’t work or if it is just your agent who doesn’t want to work. I’ll explain.
Should Your Agent Hold Open Houses?
Well, it depends. Open houses aren’t all they are cracked up to be. Sometimes they help, sometimes they hurt, and you need to understand the tradeoffs before moving forward with an open house.
Will an Open House Sell Your Home?
It is very unlikely your home will sell because of an open house. There are occasions where they are a useful marketing tool that can benefit the seller, and we will talk about that. However, long gone are the days when a buyer discovers their next home because of an open house.
The most quoted statistics are that 2% or 3% home sales come from open houses (source). Those homes would have still sold without an open house. If the conditions were right, those open houses may have helped, but let’s not give them too much credit.
Buying a home takes planning, thought, and preparation. Today’s home buyer is much more sophisticated than any other time in history. They know pricing, what they qualify for, and what their payment will be. Today’s buyers are obsessively looking online. They know details like square footage and even have a good idea what the interior looks like long before they go inside.
If Open Houses Don’t Really Sell Homes, Why Would an Agent Hold One?
There are two big reasons real estate agents hold open houses that don’t help the seller.
New Clients – Some agents hold an open house to meet new clients. This is particularly attractive to new agents who are trying to build a book of business. Open houses are free, so they work well for agents who have more time than money.
Sellers need to know that buyers picked up from an open house would most likely end up buying a different property, and your agent is also looking for other neighbors who are interested in selling. Don’t forget, serious buyers are already looking online and already know about your home. They should have no problem getting access through an agent. Let’s face it, most people wandering through an open house are too early in the buying process to act, or they are just noisy neighbors.
Placate Sellers – Some agents will hold an open house to show their sellers that they are at least doing something to sell a house, even if it is not working. We have all seen that lonely agent sitting in a vacant house, hoping and praying someone brings in an offer. It is not likely to be someone driving down the street who learned about it from a directional sign. The agent might as well be praying in church instead of an open house.
This kind of open house is often at the direction of a seller who wants to see their agent is trying everything but a price reduction. Sometimes it is the price.
When Is It Good To Have an Open House?
It is good to have an open house when you have the right kind of property that is new to the market and priced right. Good listing agents know what kind of properties work well for open houses and how to work them. It's important to remember that open houses don’t create demand, but under the right conditions, they can create excitement. Promoting online and with signs may help draw a few additional lookers, but you need people coming through who already have interest and are ready.
Groups of people, some with agents, walking around an open house create excitement and a sense of urgency. Such an environment works well to create action and potentially bring multiple offers at a higher price.
This dynamic can’t be created every weekend. It is kind of like a store that permanently holds a “clearance sale”. Pretty soon, it looks more like a desperate store rather than a good deal.
What Kind of Properties Work Well for Open Houses?
Having the right property is important. It needs to be a property that a lot of people would aspire to own, but still conceivably be in reach. You need to take into consideration that people go to open houses where they would LIKE to live, not where they can necessarily afford
Some properties are too high-end with a small and exclusive buyer pool, making them ineffective for open houses. In fact, holding very high-end homes open only cheapens the presentation and lets people in who just want to see how rich people live. The more affordable entry-level homes don’t attract any open house traffic. Nobody is browsing starter homes.
A property that is right for a successful open house is a single-family house in a desirable neighborhood that still appears obtainable to most of the home buyers. Think upper middle and something that a lot of people could see themselves owning. Agents who list this kind of home get bombarded by other agents asking if they can hold it open. Open houses at these homes are super busy with a positive buzz.
What About Condos?
Individual condominiums don’t work well for open houses. The logistics are problematic; it’s hard to get in, parking is often an issue, and most homeowner associations don’t even allow open houses. They don’t want just anyone wandering around their community unattended. Most of all, it is inconvenient for buyers, so few people attend. Open houses at condominiums are slow, painful, and ineffective
What Is the Harm of Holding a Slow Open House?
Some sellers think they have nothing to lose by holding an open house, feeling that at least their agent is doing something. There are some downsides to open houses.
Security Risk – Open houses are where signs are put out and doors are unlocked, inviting the public into your home. This may make sense on a limited basis for a busy home that is about to sell. It is less justified a slow property unnecessarily, putting the property and agent at risk.
Looking Desperate – Too many open houses make the seller look desperate. You go from advertising a home for sale to advertising that your home has not sold. Nothing reeks of desperation more than a bored real estate agent sitting in a dead open house.
Waste of Time – Setting in a slow open house all afternoon is a poor use of your agent’s time. We expect agents to be accessible on weekends and through the week too, when most business takes place. Successful agents and sellers need to use their time wisely. You want to work with a successful agent you trust so can be successful in selling your home.
Bottom Line
It is unlikely that your home will sell because of an open house. Agents who hold open houses to try to find new clients will be finding them for properties different than the home they are holding open, and when they hold an open house just to placate the seller who may have an overpriced home really aren’t serving the best interest of the seller.
Sellers with houses that are new to the market and priced well can benefit from an open house. It needs to be the right kind of house on the upper middle tier of the market in a desirable area. A successful open house brings a sense of urgency and excitement.
An open house will not create demand or cause interest in a slow-to-move property. Open houses have some security risks; you could look desperate and waste precious time. Use them sparingly.
For Real Estate Advice
We hope that you found this helpful and informative. If you are looking for a real estate broker to guide you through the sales process or a reliable property management company to help you handle a rental property in Long Beach, Los Angeles, or Orange County, California, or if you are just considering it and have a few questions about real estate, contact the Mike Dunfee Group today! We are happy to help.
