Open Houses...Not Worth the Risk to Sellers

Do Open Houses benefit the seller? Its a highly debated subject among Realtors and I have discussed it at length with many of them from all over the country. 

Lets first look at what an Open House is. There are basically two types and the names vary by area.

• Public Open House: This is usually done on a Sunday somewhere between 12pm and 5pm though some innovative marketing gurus have started Twilight Open Houses for those homes that have special appeal due to landscape lighting. It is hosted my the listing agent or another agent at the office and the public (aka Guests) are invited in to view the house. Most agents attempt to have guests register prior to viewing the home. This is usually accomplished by asking them to fill out a form or sign in book.
• Brokers Open House: Unlike the Public Open House, the Broker's Open House is done during the week and there are countless names it goes by. Some of the more popular ones are: Caravan, Tour, Progressive Open and Brokers Open. These Open Houses are done during the week and each area or region has a specific day and time where agents will conduct these. On Some Caravans or with the Progressive Open, these can be as short as 15 minutes. During the Open House, agents from the listing company as well as other cooperating brokerages walk through the house to get a feel for it.

So what's the problem with Open Houses? First we need to look at the Brokers Open House. In just about every case, the Listing Agent will run some type of draw to get agents to come see it. Most offer Lunch, Dessert while others will do Wine & Cheese, run Contests or Raffles or even have Mortgage Brokers host it with them also called Sponsoring as these Mortgage Brokers pay for the event.

Many years ago, BI (Before Internet) this was the only way agents could see a home, get a feel for it and describe their experience to potential buyers. Back then we would have to wait for a Book to be published with a brief description of the home and if you were lucky, a black and white photo. It was also typical for the listing broker to have to let you into the home for sale. Then came along Lock Boxes. Agents could now enter a house for sale based on a per determined showing schedule. A simple phone call and you are granted a code that would let you in.

Today, with the power of the internet, we can see dozens of pictures for a property, watch a virtual or even a video tour of the home, look at satellite images to get a feel for the neighborhood or see how close it is to commerce, a highway or school and get the full property card right on line. We can gain access to the house via electronic lock boxes that keep track of which agent was there as well as what time the agent was there. A Buyer's Agent will typically employ all the tools at their disposal to research potential homes for a client. They may then select a few to preview prior to showing it to a client, but rarely do they need to spend a half day driving around town, going from one house to another eating or worse drinking, just to see what just hit the market.  Both the Buyers Agent and the Sellers agent can spend their time much more efficiently than touring around town burning up precious natural resources.

OK, so a Brokers Open House is not really effective anymore. What about Public Open Houses? Just like the Brokers Open, Buyers today embrace the power of the internet to preview and research homes. In fact the National Association of Realtors states that 87% of Buyers start their search on line. Does that mean that 13% start their search at Open Houses? No, I am afraid it does not. The other 13% either bought from a family member, friend, at an auction or direct from a FSBO. In fact, there is a National Company that proudly advertises that 3% of people who attend an Open House actually buy. Unfortunately, what they don't tell you is that these 3% did not buy the house they saw, but rather started working with the Listing Agent to help them find another home.

So where is the problem? After all, my headline says RISK. OK, so we have established that the chance of your home selling at a Public Open House is less than 3% and those are really bad odds. In fact, most of us would never do something where the risk of failure was 87%, but that is not the risk I am talking about. Here are the risks.

To begin with, an agent that conducts an Open House places themselves at risk. Every year Realtors are attacked at Open Houses. Right here in my region we have had numerous reports of criminal activity that took place during an Open House. From a Realtors that were attacked, to homes being robbed during the Open House. Think about this for a moment. You advertise your house...to the general public that it is Wide Open between these house and its almost a given that only one person will be there to have you register as you enter. How many people can an agent follow around a house? How much crowd control can one agent perform if it gets busy? How easy would it be for a thief to distract the agent while another member robs the house? And this is where the risk comes in play! When you open your house to strangers, Realtors can not determine, at that moment, if the people attending it are genuine buyers, are who they say they are or are simply there to case or rob your house while the agent gives tours.

In todays Day and Age, there is simply no need for an Open House. If you think I am wrong, ask a Mortgage Broker if they want to work an Open House with you or with your agent, most will decline. Yes, the very same mortgage broker that will lay out a huge spread for agents, will not co-host a Public Open House. See, they already know that this is not where business is generated. So why do some agents insist on Public Open Houses? The answer is simple...Leads! Seer that same 3% that is so bad for you, the seller, is a good lead source for the listing agent. Even though they know it is unlikely to get a buyer, it is very likely a neighbor will stop in and pick the agents brain. A good agent can use this time to meet the neighbors and cultivate more business int he neighborhood. Have you ever seen a neighborhood with the same agents signs all over. This is what they are doing. Does this benefit the seller...Nope!

So next time you ask your agent to do an Open House, think about what you are really telling them. If it were me and my house...I'd tell them to spend an hour blogging about it and making sure it is all over the internet. 87% of your Buyers are there!

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