Note: Kris and I are taking a 48 hour break this weekend and heading to her “Happy Place” (Las Vegas) to celebrate our 20th Anniversary (time flies when you’re having fun). Since I’m not letting Kris take her laptop, we will not be around to respond and/or defend ourselves. We will check back into the “Blog World” on Monday. Hope everyone has a great weekend!
Ahh, the Open House. Typically the way many agents spend their Sunday (and/or Saturday) afternoons. What is the value of this marketing tactic? How should an open house be promoted? Who benefits the most from an open house? I will attempt to answer these age old questions without a 10,000 word diatribe.
The open house is a tried and true method for exposing a home for sale. But does it sell the home? I don’t know. You say, “Steve, why are you writing this post and are not able to answer your own question?” Well, because I can only speak for me (and, if I’m really careful, for Kris) and my/our own experiences. Which presents our first Conundrum:
Conundrum #1- What are the chances of selling a home through an open house?
I have not been able to find statistics on the success rate of the Open House method. I have researched this on Google and the National Association of Realtors website. There are numerous articles, but none that I have found (yet) that actually quantifies the rate of successful sales as a direct result of an open house. Through my endless research (about a half hour), I did find some interesting stat’s that I will share with you now:
1. 20% of attendees at an open house are neighbors (Realtor Magazine, June, ’03);
2. 87% of those attending an open house find them to be “useful” (NAR’s 2004 Profile of Home Buyers and Sellers);
3. 75% of buyers drove by or viewed the open home, but actually first FOUND the home on an internet site (NAR’s 2005 Profile of Home Buyers and Sellers);
4. 7% of buyers found an agent at an open house (NAR’s 2005 Profile of Home Buyers and Sellers).
So, the question remains, “What are the chances of selling your home through an open house?”. With all of the ANALysts out there, I have got to believe someone has the answer. I just don’t know who, or what, it is.
Since Kris and I have held a few hundred (okay, many hundreds) of open houses over our career (and actually sold a few homes as a result), I will give you our unofficial estimate: About 1-2%. Yes, about one (or two) chances-in-a-hundred. Maybe we just suck at open houses. I don’t know. But in discussing this with many other agents over the years, we get the sense that they have about the same success rate. Now, if you ask the question, “How many other transactions have we generated as a result of holding open house?”, the answer is many. Which brings us to:
Conundrum #2 – Who benefits most from an open house?
This one is easy. The agent, of course. While you may be doing everything you can to sell that home, the reality is that your chances (if you believe our unofficial estimate) are 1-2%. The agent gets to put their signs all over the neighborhood, meet the neighbors and schmooze with potential unrepresented buyers. This is not a poor reflection of the agent, just the reality because of the nature of the people coming in to your open house. Which brings us to:
Conundrum #3 – The open house shopper!
We always try to qualify whom we are speaking to in the context of whether or not the visitor is represented by another agent. If so, we want to respect that relationship. There are buyers who have an agent that like to visit open houses, but they are in the minority (obviously, if they have an agent they can see the home at any time). Most visitors who are not looky-loo neighbors and who do not have an agent, by their very nature, may be non-committal. No agent, just looking. So, your chances are already further reduced. Add to that the fact that this “potential buyer” likely just happened to see your “Open House” directional signs from 4 miles away and has been following them for the past half hour and you may wonder, what are the chances that this is the perfect home for them? The answer is “zilch”, at least 99% of the time. Which brings us to;
Conundrum #4 – Should agents advertise their open house?
Based upon what Kris and I see from other agents the answer is a big NO! We disagree, of course, but it really irritates us when we see about 14 open houses with signs all over the neighborhood, none of which were advertised. Many agents who do not want to or cannot afford to advertise their open house just throw their direction signs out next to all the other open house signs and hope for a “Hail Mary” because that is just about the chance they have of selling the home. But that’s not the point for these agents. The dirty little secret is that they just reduced the 1-2% chance of selling your home to something less. But they have their names all over the neighborhood every weekend so they look big. They will spend all day schmoozing visitors in hopes of gaining a client for another home. Unfortunately, this does not serve your seller client well. When advertised properly (identifying the number of BR/BA, price, etc.) you at least have a chance of getting a visitor that actually wants/needs to buy the home the you are holding open. The “others” who wander in have no clue how many bedrooms or how the home is priced.
Then there are the listing agents who not only don’t advertise the open house but ask another agent to sit it open and then require them to use the listing agents directional signs. Now that’s bold! Sometimes we cannot cover all the homes we have open so we enlist help. However, we do NOT require the agent assisting us to use our signs. How ridiculous! Too many agents have forgotten that the primary mission of an open house is to try to sell THAT house, not another one. You are doing a disservice to your client if you are too cheap to advertise it and only use the open house as an opportunity to get your signs out in the neighborhood.
Conundrum #5- Based on all of the information above, why should you use the open house if you are trying to sell?
Because it’s a tough market right now and you want to give yourself every opportunity. New buyers are entering the market every week. Now I’m not suggesting that a home for sale should be open every weekend. It can get stale that way. Also, we stongly believe that the “for sale” process is stressful enough. If vacating the home on a Saturday or Sunday afternoon is a hassle for you after a hard week at work, don’t do it. You can’t and should not make your life miserable. But, if acceptable, an open house once or twice a month is probably not a bad idea. You never know when Mr. or Ms. 1% will walk in.