Are Open Houses a Waste of Time?
Desperate measures
Nationwide, home sales are expected to drop this year, and sellers in many markets are already dropping their prices. That may prompt more sellers to compel their listing agents to turn to open houses as a last-ditch effort to secure a buyer at last years pricing.
In a buyer's market, if you are a seller you want to try everything. Though this may feel good because something “proactive” is being done to get the house sold, you need to be thoughtful about how various actions will be perceived by buyers and their agents. We do quite a bit of work as buyers agents and one of our favorite tactics to identify the most vulnerable properties, is to watch for the properties that run open houses week after week, month after month...we know that the agents know they don't work, so, there must be a very anxious seller in the background demanding that they be held.....
I love open houses, but not because they move my properties. The real reason most agents hold them is because they bring more business….other business. Prospective home buyers often walk through my open houses, find the property is not suitable for them, then ask what other listings I have....the "dirty little secret" of our industry is that open houses have always been better for agents than sellers!
The proliferation of Internet listings and other online real estate information is quickly making open houses more of a "long shot" option, rather than a requirement for selling a home. In 1995, just 2% of home buyers used the Internet to look for a home, according to the National Association of Realtors. Last year, 87% of home buyers started their shopping online. ..In the markets where open houses statistically work best, only 2% to 4% of listings sell from open houses.
Agents, sellers question effectiveness
For the most part, after the initial two or three open houses, I don't like to hold open houses for my listings unless sellers press the issue. Statistically, most sales will come primarily from my contacts with other agents and from the multiple listing service. Many agents now refuse to hold open houses, considering them a waste of time, and a security threat. And many sellers now prefer to open their doors to serious buyers only.
Open and shut
Consumer sentiment about open houses has waxed and waned over the years, along with the ups and downs of the real estate market. In 1995, 41% of buyers surveyed relied on open houses to buy their home, according to data from the NAR. By 2000, it had dropped to 28%. Beginning in 2003, however, as the market started to heat up again that number began rising. By 2005, the last year for which data is available, 51% of all sellers were using open houses, though not all agreed they were effective. Some 45% of sellers found open houses only "somewhat useful" and another 12% didn't consider them useful at all, according to the NAR. "Many sellers are just a little bit leery of having an open house," says Pat Vredevoogd, agent and broker-owner of AJS Realty in Grand Rapids, Mich., and incoming NAR president. Some, she says, are worried about letting complete strangers roam freely through their house, with access to electronics, jewelry, prescription drugs and personal information. Others just don't want their neighbors and a host of other so-called "looky-loos" wasting their time just for a look at their décor. And many agents won't do them for security reasons, as a number of their fellow Realtors have been attacked and some even killed, as they sat in an empty house alone and vulnerable. Vredevoogd, herself, isn't keen on them. While they have proved helpful over the years on some of her more expensive listings, most didn't produce a sale. "Over the past year, maybe two or three of the 50 houses I sold were from an open house," she says. "Personally, I think it's a waste of time. It's one of those things that has gone by the wayside." Before jumping into an open house, Vredevoogd counsels her clients to put the house up on the local MLS and other Web sites, with a lot of pictures and perhaps a virtual tour, if the home has a lot of nice features. She sends out a barrage of e-mails to other agents and makes a lot of calls. If the house isn't getting a lot of interest, only then will she go through with an open house.
When open houses still make sense
Open houses are effective in the very beginning of the marketing period as they serve two very useful functions: 1) They allow brokers/ agents who were working on MLS tour day to preview your home for clients without having to set up a private showing. 2) At the start of the marketing period, when the home is new to market and interest may be high, open houses can contribute to the sense that the property is very ”active” and may create a desirable sense of urgency on the part of prospective buyers and their agents.
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