Original article source – The Drawbacks of an Open House
Real estate open houses are one sales tactic that may be more about the hype than about results. Some real estate agents play up the benefits far more than they should, considering how many drawbacks there are to the process. The fact is, open houses are rarely conducted to sell a home. Sure, there are agents that still believe that the open house has a place in the sale of a home. There will always be home owners that do not know any better. However, the facts about open houses should discourage anyone from bothering with the process.
The debate with whether an open house is a good marketing activity almost always boils down to a battle between real estate agents who are at the pinnacle of their game (top producers) and those agents who need to do open houses in order to generate additional clients. In other words real estate open houses can be great prospecting activities for Realtors. Do open houses sell homes? The answer statistically is clear cut and dry – Rarely!
There are some real estate agents that have to do open houses or they wouldn’t know where to find their next prospect if it hit them in the face. What consumers need to understand is that “real buyers” schedule appointments to see homes they are interested in viewing.
How many buyers who are ready, willing and able to purchase a home say to themselves – if those Realtors don’t have an open house – forget about it I’m not interested!” Sounds pretty moronic doesn’t it? That’s because it is. When weighing the pro’s and con’s of an open house the con’s come in ahead by a large margin!
Why You Shouldn’t Have an Open House
1. Security issues – One of the biggest drawbacks of an open house is the potential for theft. Letting strangers in off the street to wander around your home carries some obvious security risks. While the majority of visitors will most likely be there to view your home and learn more about it, some may be there for more nefarious reasons. The fact is, during an open house anyone can come in – even people who are looking for access points, security weaknesses and valuables. This is something most real estate agents who tout open houses ever want to discuss. They will sweep this fact right under the rug at the sellers expense just to keep the prospecting train rolling.
Last year in Hopkinton Massachusetts during the peak Spring selling season one of the agents in my office held an open house on a Sunday. The home however, was listed on the prior Wednesday with no showings allowed until the open house. This by the way is the only truly effective means of holding an open house as it sets up the possibility of a frenzy of potentially interested buyers viewing the home at once.
The delay in showings creates pent up demand for the home and the chance for multiple offers. The downside however was great. There were thirty to forty couples who visited the open house during the two hour viewing window. The agent, God bless her, could not possibly watch every individual walking through the home at all times. This unfortunately cost the seller big time, as a $5000 dollar painting was stolen right off the wall! The agent of course had no idea who could have stolen the art work and neither could the police after visiting the home. Good thing for home insurance!
2. Risk of theft – This ties in to security issues, but it deserves its own section. There have been documented cases of people breaking into houses for sale and stealing things, such as in this New York Times article on open houses. Sometimes they do it in unoccupied homes and sometimes they do it in homes that people are still living in. The temptation is too much – they can walk into the open house, see what they want to take and how they can get in, and then they later burglarize the place. Folks this is not just an isolated example – this happens all around the country! An open house is an open invitation to make theft more probable.
3. Unqualified prospects – Have you ever driven through a nice neighborhood and seen an open house – a really nice house – and thought about stopping in to check it out? Most people have at least considered it. There is not really anything wrong with doing so – how often do you get the chance to see how other people live and decorate? The problem is, often the people coming into your open house are doing the same thing. Just stopping in to check things out, not to buy. The ironic thing about this is that Realtors are constantly preaching to homeowners how they will go out of their way to make sure a buyer is qualified to buy their home. Yet when it comes to an open house this line of thinking is thrown out the window. Come on in everybody! As long as you have a pulse you are welcome here.
4. Nosy neighbors – An open house is like a beacon to neighbors curious about your home. They may be great neighbors or not so great neighbors. However good they are to live by, you may not want them wandering around your house. Unfortunately, there is no real way to stop them. Once you open your house, most anyone can walk though the doors. Expect the busy bees stopping by your home to be discussing it with all the rest of the neighbors who failed to show up. Yes this means you need to be doubly certain not to leave your underwear and bra’s hanging around for everyone to see.
5. Lack of one on one attention – Your Realtor may be really motivated to sell your home, but he or she only has the ability to communicate with one set of buyers at a time. This means that if things get busy, there will be a lot of missed opportunities – people that may have been good prospective buyers that never even get to speak to the real estate agent. There is no way for an open house visit to compare to an actual home viewing with your agent. Most people who come by and visit are probably going to want to return at a later date to really check things out if they are serious buyers anyways.
6. Seller competition – Other people selling their homes are likely to stop by and see what you are doing with yours. This only makes sense, especially if they are in a similar neighborhood with a similar home to sell. However, these visitors do you no good. They will simply see what you are doing and take what works for them.
In fact if they look over your home and think it looks pretty darn good they will probably be dropping the price of their home to be more competitive. This is a good example of helping the competition. Most sellers who are competing against you wouldn’t schedule a showing to do the same snooping they would do at an open house.
7. Agent’s ulterior motives – Some agents may be really excited to do an open house and be firmly convinced that it is a valid sales method. However, a lot of agents actually use open houses to meet other clients. All of those unwanted visitors – with the exception of the burglars – are potential clients for the agent.
Your nosy neighbors may want to sell later so the open house is a great place to build rapport with these people. More than anything else the agent will be meeting people who are not qualified to purchase your home but they are buyers none the less. If you are selling a $500,000 home a buyer who can only spend $400,000 is not going to be buying your place. Right? Guess what though – this $400,000 buyer is going to buy a home at that price point somewhere else. The agent holding the open house at your place knows this. This is a prospect for the Realtor. Does it help you in anyway – no it certainly doesn’t. Plenty of agents know that open houses are a good way to look busy while seeking other clients for future work.
8. Rarely results in sales – This is the biggest reason to be wary of an agent that lauds his or her open house practices. The fact is, homes are rarely sold as a result of an open house. According to the National Association of Realtors, the number of homes sold due to an open house is staggeringly low – a measly 2%. NO – you did not read that wrong. This is not a promising number. If fact, it is low enough to make you question the worth of even having an open house.
The Positives of an Open House
After reading about the drawbacks of an open house you are hopefully questioning the validity of why they are important. The fact of the matter is they are clearly not necessary to sell a home. They are an archaic means of marketing a property. Could you get lucky and sell your home at an open house? Anything is possible but if you are planning on it you are setting yourself up for disappointment. From a sellers standpoint there really is only one positive that an open house provides – the ability to set a certain time on a particular day where people are allowed to come and look.
This is beneficial to some sellers who may work out of the home and have a hard time vacating the property during the week. By setting up a day/time in advance some buyers may choose just to come by on the day of the scheduled open house. There are also some homeowners who have moved out of their home prior to selling and could care less about having their weekend interrupted by an open house. For these sellers an agent hanging around their home all Sunday afternoon is perfectly fine. Bang your head against the wall and have a grand ole time!
For those of you who don’t fall into these categories and are convinced you still need to have one make sure you don’t make any of the most common open house mistakes. Be wary of not making your home as presentable as possible. Just like any other showing, your home should sparkle.
Final Thoughts on Open Houses and Real Estate Agents
If you have interviewed a few real estate agents and you are choosing one because open houses are a big part of their marketing plan then you are making a mistake! This clearly should not be the basis for selecting a Realtor to work with. When deciding on which real estate agent to choose look for these qualities instead:
- Has a dominant online presence locally – An agent that appears in competitive local searches understand what’s important for bringing in business.
- Provides exceptional photography – First impressions are everything in real estate sales. You want your home to standout online as a property people want come and view.
- Uses vivid descriptions of your home in all of their marketing – Does the agent take the time to really craft something that captures the essence of your homes best features or did they just slap something together?
- Goes above and beyond with other creative forms of real estate marketing such as video tours, floor plans, feature sheets, improvement lists, etc.
- Clearly has good communications skills – how quickly does the agent call or email you back. I am talking about before you hire them. This will be an indication of things to come if you select them.
- Is honest, trustworthy and doesn’t care where their next sale comes from – What this means is you will always get the best advice from an agent that doesn’t need a sale not one that is dependent on their next commission check.
As you can see the drawbacks far out weigh the benefits when it comes to an open house. The serious buyers looking for a home in your area will be calling to see your place with their agent. Don’t fall for one of the greatest Realtor myths of all time – open houses not are necessary to sell homes!