Open Houses are a huge marketing farce. You might understand this already or this might be a revelation for you. I'm sure "open house" is a familiar term and most likely one of the things about real estate that you expect to encounter. Perhaps you're entrenched in the buying process and you're actively seeking a free lunch of cookies, cheese, and crackers—you can even search for open houses on many of the online real estate websites and get your fill. Or maybe the open house bit was part of the sales presentation the last time you sold your home. If you're on social media, I'm sure you've seen an Open House on Saturday - Post. The open house is very familiar, but it's not for the seller, in fact, I could probably argue that it doesn’t help sell the home either. Sellers who allow their agent to hold an open house are doing that agent a huge favor. Let's talk about... Typical Open House Logistics
Who This Helps and How
What You Should Do
Typical Open House Logistics
Put yourself in a seller's shoes for a second. You are a seller, okay? You want your house to sell, and you want to make sure everyone possible sees your home in hopes that one of them will buy it, and therefore you want your agent to hold an open house. For you, this means you’ll need to be gone on a Sat/Sun (or both) for 2-4 hours (or more). Your home doesn’t need to be any cleaner than usual because it should be show-ready anyway, but nonetheless, you’re going to make sure it looks extra good. So you have a little inconvenience of cleaning and leaving. For your agent, this means driving around the neighborhood and putting up signs at key intersections, buying some sort of snack/spread, maybe some waters, and being at the home to “sell” it (we’ll get to “Selling it” later).
"Who is going to show up? No one, that's who.
Who is going to show up? No one, that's who. I’d be interested to know what you actually think the answer is in your mind, or if you’ve even thought about the answer to that question. The real answer, unfortunately, is… No one who’s going to actually buy your house. Here’s why. Most buyers have agents and can see the property whenever they want. Odds are that buyers with agents would have seen your home regardless of the open house—they might actually show up with/without their agent during the open house, but again, they would have made arrangements with their agent to see the home even if there wasn't an open house. Buyers without agents DO exist, however, most of the time they are not serious buyers, otherwise they would have reached out to an agent to help them see some homes. Despite these truths, and in all fairness, there are serious buyers without agents out there, and they might show up to the open house—this is really the only demographic that you’re looking for. But most will be hungry neighbors and non-serious "buyers" and they will be few are far between.
Who Benefits From an Open House?
You want the result of an open house to be an increased chance to sell the home, and technically it IS an increased chance… but the actual result benefits your agent more than anyone. This benefit comes two-fold: marketing and lead generation. With whatever avenue(s) your agent decides to market themselves, they’ll be able to use the open house as an event to put in front of peoples’ faces—this lets the public know they are at least good enough to get a listing (and… They’ll "do an open house for you too!!" SMH). This is actually very beneficial for agents who are smart enough to use social media. The agent that is a social media novice love these posts, because their posts are either open house, new listing, or sold listing. The open house gives agents the chance of exposure and potential gain more clients. The lead generation continues offline in the physical realm of the home. Everyone who walks through the open house will be required to register with their name phone number, email, or both. As I mentioned before, most people walking through will be neighbors and non-serious buyers, however, they may turn into serious buyers and sellers in the future. This doesn’t sell your home at all; it only allows your agent to make contact with future buyers/sellers.
"The actual result benefits your agent more than anyone"
Now there is the rare case of the aforementioned serious-no-agent buyer. If this happens it can be very beneficial for you as a seller. Your agent is probably smart and good at negotiating, because you are smart and wouldn't have hired a "bad" agent. The serious-no-agent buyers are often less educated regarding the market than they would be if they were using an agent. Your agent may be able to take advantage of this by persuading them to buy your home due to X, Y, Z features, justify the price, and even learn more about the buyers’ motivations. This probably sounds great; even if the chances are low, it's worth it to ask your agent to do the open house for the chance of taking advantage of the serious-no-agent buyer... right? Well, yes, that is right. But... here's the kicker...
**Sidenote- If you're a buyer without an agent, and you are thinking about doing it on your own, read my post here. From the buying side, there is no reason why you shouldn't have an agent in IL. BTW... I'd be happy to help. ;)
Agents know the truth that is the title of my post. The benefit of an open house is more for them than it is for the seller. Open houses need to be done on weekends, and there is low probability of getting many leads, let alone quality ones. The awesome, smart, negotiator you hired will usually look for an agent in the office to hold the open house for them. These agents are typically newer agents that are looking for leads. This isn’t a guaranteed bad thing, but you’ll want to be sure that the agent hosting the open house knows what makes your home unique, why it’s priced the way it’s priced, and how to talk to serious buyers. If not, the potential for that serious-no-agent buyer just went out the window! Or maybe the front door, literally! Because that agent may be inexperienced and/or uneducated on your home. They were simply a place holder for the listing agent, so that he/she could tell you, the seller, that they had an open house, and "we're doing everything we can" to sell your home. These open house holding agents also need to know how to make people feel comfortable in the home, which often times, because their true motivations are to gain a lead/new client, the atmosphere can become a little intrusive and salesy—this will turn people away and/or cause them to not focus on your home. They'll be busy wondering where your used care salesman is in order to avoid further pressure and being forced to answer any more awkward questions.
What you should do?
If you like your agent, then let them have an open house or two, if they’d like to, because again, this benefits them 99% more than it does you (93% of all stats are made up). If it’s too much of an inconvenience, then NOT having an open house isn’t going to hurt your chances of selling. If you are still a believer in open houses or don’t want to take the chance that you miss out on an opportunity for your agent to sell your home, be sure you know how it’s going to be run, and by whom; you also may want to run an ad in the paper (just kidding, sorry I couldn't resist).
Broker Opens are Open Houses for agents only. These are just as pointless as open houses if not more so. Both open houses and broker opens CAN be beneficial if your home isn’t on the market yet; otherwise, everyone will be able to see your home online and can schedule a showing with their agent or your agent. There is no potential to take advantage of the serious-no-agent buyer, because they aren't invited to these. It's simply a waste of time for you and a way for your agent to brag to other agents.
Contrary to this entire post, it is not a 100% blanket statement that open houses are never appropriate. In certain markets, such as Denver and Seattle, where sellers are faced with over 100 showing requests within a week's time, an open house is probably the best way to show the property. In situations of high-demand the open house is better for everyone involved; Sellers have a planned day away, and buyers have a larger window in which to stop by the home. There's a lot of agents in the real estate industry that like to look busy and spend time on things that are irrelevant, outdated, inefficient, and ineffective. The Open House is one of those things, the majority of the time... in my humble (not really) opinion. :) Thanks for reading! Comments and Questions are welcome!