The ink was barely dry on my real estate license. I needed business and no clue how to secure it. Figuring I’d tap into my broker’s 30+ years of experience, I said to him, “Yo! How do I get clients?”
“Here’s a printout of all our listings. Hold open houses. It’s the single best way to pick up buyers.”
“Do people actually buy homes they visit at open houses?”
“Hardly ever. But that’s not the point. You’re looking for buyer clients ”“ clients who will buy something.”
That’s. Not. The. Point.
Really? Something tells me that if you are trying to sell a home and you tell the sellers that you want to hold their home open, not to sell it but to get yourself some new clients, that they will tell you to”¦ take a hike.
Is this how that conversation goes?
“Hi there dear client. I’d like to hold an open house in your home this weekend!”
“Great! Do you think that will get it sold?”
“Oh, that hardly ever happens. According to the National Association of Realtors 2010 Profile of Home Buyers and Sellers, only 2% of home buyers between the ages of 25 and 64 say the first step they take in finding a home is visiting an open house. And only 11% say they found their home by the yard sign and/or an open house. Most agents say the odds of actually selling the home held open are extremely remote, on the order of 1 ”“ 2%”¦”
“Well, then what is the point in holding my home open?”
“It’s a great way for me to pick up new buyer clients!”
Yessir, I want you to leave your house for several hours on the weekend (make sure to clean it first), lock up all your valuables and prescription medications, and let complete strangers into your home (hopefully none are criminals scoping out what to come back and steal) ”“ all so I can build my base of clients.
What a deal!
More likely the conversation with the seller goes like this:
“Hi there dear client, I’d like to hold an open house in your home this weekend! It will provide a ton of exposure to your home, create buzz, and get buyers really excited about your home! I’ll carpet bomb the neighborhood with invitations, bake some cookies so the home smells great, and buyers will flock here in droves. It’ll go viral! It’ll be awesome!!”
And there will be no mention what-so-ever of the true purpose of holding the open house — so the agent can get exposure to potential buyers and work their magic converting them into clients.
That lack of disclosure is just plain wrong, in my opinion. Well, not just mine. Read Michael McClure’s insightful article, The Ethics of Open Houses. I linked to this article on my Facebook profile earlier this week and an excellent 112 comment discussion ensued. There is some great conversation in that thread, both pro and con over open houses (and like any “electronic conversation” it sometimes wanders off topic).
That conversation is really the reason I’m writing this post. Facebook discussions are very transient which makes them difficult to find and I wanted to be able to reference that conversation, and the shared links, in the future. Putting a link to the conversation on this blog makes that possible.
I did not write this post to demean anyone who believes in open houses. Hey, if they work for you, knock yourself out. Hopefully if you are using open houses to acquire new clients you are disclosing that information to your sellers. If you aren’t disclosing that, well”¦ shame on you.
Can open houses actually sell the specific home being held open? Of course they can. Are they the most efficient marketing method for selling a home? Not even remotely according to numerous reports from agents as well as the National Association of Realtors. I’m sure that local conditions and customs play a large part in the true success of open houses. (And I’m defining “true success” of an open house as actually selling THAT house.)
Another thing that seems to escape most of the agent-to-agent conversations about open houses are that if an unrepresented buyer does happen to come along and decide to purchase the home, then the listing agent is probably going to wind up representing both the buyer and the seller. Now we’ve entered into the dark and ugly world of single-agent dual agency ”“ where one agent represents both buyer and seller in the same transaction. You don’t want to get me started on that. See On Dual Agency, for my general thoughts on that matter if you are so inclined.
Here’s a little video I made during that Facebook conversation. It’s just a quick and fun look at what agents might actually be doing at open houses. Don’t be a hater, it was supposed to be funny.
Home sellers, buyers, agents and brokers, what are your experiences with open houses? Do they “work” ”“ however you chose to define “work”? Do sellers “expect” their agents to hold open houses? How do you react to that? Personally, I think the time spent marketing and sitting in an open house is far better spent working on activities that are proven to reach more buyers ”“ that being primarily the Internet.
But maybe that’s just me”¦
Photo Credit: Orin Zebest on Flickr. CC Licensed.
The Phoenix Real Estate Guy was started by Jay Thompson, and I have a little blogging problem... he liked to say...
Jay, I once wrote an article on the limited effectiveness of open houses and how to maximize their potential and posted it on ActiveRain. I also mentioned how, after the home has been on the market for awhile, that open houses are held primarily for agents to meet buyers.
Well, as you might imagine, every ActiveRain agent who’d ever heard of an open house had an opinion. After about 70 responses, it was clear that they’d missed the entire point; that open houses work when done correctly and within a certain time frame. Outside of that they are a fantastic way to look busy while doing little.
Have a great weekend.
Love it, Jay!
The video was truly inspired. Although, I think a much more realistic clip would have the agent playing Angry Birds…
T
Amen Brother Jay! I did an article on this same topic a few weeks ago and I’m still getting comments on LinkedIn (by senior agents) about how they are so effective and they do them all the time… Hmmmm.
Jay,
I was almost laughing reading this post…great video btw..=)
In our area many sellers believe in opens houses. They do work in Manhattan ( a very unique market), but they are not effective at all in my experience for the suburbs. Yet, many sellers want them because it looks like the agent is doing something.
Hi Jay ~ I clicked into this post wondering whether you and I would be on the same page on this one. Turns out we are. What a surprise! I get a lot of resistance from other agents who think they are effective. I agree to a point. As a tool to pick up clients. Not as a tool to sell THAT house.
Oddly enough it’s me who often talks clients out of having open houses too. They want them. I explain they’re cleaning round the clock and messing up their weekend just to give me an opportunity to pick up a client. And even that doesn’t happen all too often so what’s the point?
As usual your post hit on everything that is wrong about open houses, including the dual agency factor… Now I’m going to surprise you by telling you I have an open house tomorrow. My first in months. I have a brand new listing and the seller wants them. I didn’t mislead her. I told her what I thought of open houses, but I want my clients to be happy so I’m willing to accommodate and hold a few in the first 30 days. It’s going to be interesting tomorrow. This is a nice house that I expect to sell quickly and I don’t do dual agency. I see a few interesting conversations in my future…
I got very lucky, the first two homes I sold were Open houses, the first one was a FSBO, I called and listed, sold it a week later. The funny part of that is I always stay the full time and this couple came within 10 minutes of closing the doors!
The second one sold at the second open house (Sunday).
Double ended both.
Have not sold another since.
Hi Jay, I agree with you on this one and most of my sellers do as well. With a 1-2% chance of selling their home–or even having someone stop by that’s not just a nosey neighbor who only wants to know if they ever renovated the powder room, my time is best spent doing other avenues of marketing their homes. One suggestion that I would offer–“I’ll advertise it if you’re home on Saturday and want to hold it open!” Chances are, they’ll never have to leave their home during that time!
Hi Jay, I agree with you on this one and most of my sellers do as well. With a 1-2% chance of selling their home–or even having someone stop by that’s not just a nosey neighbor who only wants to know if they ever renovated the powder room, my time is best spent doing other avenues of marketing their homes. One suggestion that I would offer–“I’ll advertise it if you’re home on Saturday and want to hold it open!” Chances are, they’ll never have to show their home during that time!
Yikes Jay! This one could be the best position (ever) written against holding open houses. We do not do open houses either and for the same reasons you cite. Sadly, we have lost a few listing presentations to folks selling the ‘open house’ as the prime marketing ploy. I’ll point future listing presentations to this article. Seriously!
Keep up the good work Jay. I’m one of those subscribed that should comment more often, but I enjoy reading what you have to say. Even the localized posts you write. Like the one about the Scottsdale Tavern (or whatever the heck it’s named) you wrote recently. Nice Jay! 🙂
Jay – I’ve actually told my clients the basics of what you’re saying here and they’ve said “well that doesn’t make any sense, we want to sell the house” – they see clearly the ineffective use of time that an open house can be. I’ve also had clients say that they’d gladly let me hold a house to help me increase my business. Honesty can go a long way. Most of the open houses I’ve done have been for other agents though (and were for the purpose of gaining new clients and maybe, just maybe getting to be the lucky one who breaks the statistics and sells the home).
Love the Facebook discussion, particularly since it delved into the dual agency conversation which you know I will have with anyone, anywhere, anytime.
I have heard both sides of open house effectiveness for agents. Just like other methods of lead generation, etc. It does depend on the amount of preparation and work one does. If you select a home with little visibility, do nothing but stick one sign in the yard, chances are you will not have a successful open house. On the other hand, select a high visibility street, put a sign up on Monday saying the home will be open this Sunday, post on the internet, advertise in the paper, call the neighbors and other agents that work the area, etc. These Open Houses can be successful.
Excellent article and widely open to debate. Take a diversified country, add in different selling styles, along with a handful of other variables, you will get a different answer from any realtor you ask about the effectiveness of open houses. I think a very simplistic approach to this would be to contribute the same percentage of time on your particular selling method.
If 65-70% of your leads are from internet sources then you need to spend 65-70% of your lead generation time on the same. Different realtors will get varying results but if you’re only seeing 1-2% of your leads from open houses then it’s hardly worth the effort.
There is another aspect to consider and that is what I call the “wow” factor. No matter what kind of online listing software you’re using nothing beats that feeling for new home buyers walking through and experiencing first hand what their new home might look like. I’ve heard of very successful realtors that derive more than 50% of their sales from open houses. This topic can be debated for hours!
Keep up the great articles!!
“If 65-70% of your leads are from internet sources then you need to spend 65-70% of your lead generation time on the same.”
Kevin,
If 65-70% of your leads are coming from open houses, you are in trouble my friend! 🙂
The reason agents in my area have open houses is because they don’t know what else to do. To me it’s the worst way to meet buyers for tr simple fact that few people attend these things and there’s no follow up at all. You have to meet people online, but realtor sites are horrible for that. Very few if anyone has the conversatiins that you have as part of their arsenal, because they won’t make the effort. Give people a great reason to call you and they will. I see open houses as an outdated approach, just like dragging buyers through tins of home knowing that 99% won’t meet their needs. We’re so far behind the rest of the world when it comes to effective marketing. Like the Flintsone era.
You have by far the best mind talking out there. While you’re selling common sense insight others are selling bs opinions. You’re one in a million. Bravo!!!!!!
Jay, I loved the Video.
I have heard that there are more handymen and home inspectors looking for work at open houses than actual buyers.
I take a similar approach. I’m hired to sell the house to other agents, so that’s what my approach is. Agent opens are a great way to get instant feedback in quantities – and value – that you can’t get from a public open house.
And I don’t drink beer, but when I do, it’s at open houses. Okay, not true, and a bad Dos Equis reference.
Stay thirsty my friend! 🙂
I did a lot of open houses early on. Never actually sold one, but I think they are great for meeting buyers and keeping your face to face sales skills sharp.
My conversation with my sellers is very similar to yours, as a result, I just don’t get to do many open houses anymore. I have to find other ways to entertain myself on Sundays now.
I think the clients just want to see their Realtor doing something. I think most think that we just post a picture and hope and pray that someone else sells the house. they don’t understand that we actually spend all day on the phone solving problems and talking to clients who might be interested in seeing their home.
Great article. As a new agent, it take me long to figure this out either.
I have never done an open house and I don’t intend on starting. What a colossal waste of time for both the Realtor and the client. The time is better spent marketing the listing online.
An Open House is not an event. It is a process. There are things that lead up to and out of it, when combined make it an effective marketing piece to an over all marketing campaign for a listing.
I use to the feel the same way about opens. I’m wired as a proactive person. When listing and selling, I spend 95% of my time listing property. Rarely worked with a buyer, so to try to get me to sit an open…good luck.
And I always quoted those numbers 3% success ratio from NAR, blah, blah, blah but then I noticed something….
A website in Madison, WI FSBOMadison.com started to dominate the Madison market place and the homeowners, which in this case also sellers, used Open Houses and for some damn reason it worked. With out being there for every sale, I can only guess at way…here is my guess….
The homeowner aka the FSBO cared about selling the damn home. I’ve witnessed to many Realtors passive in their approach. Let the guest come in, look around and leave. Never once, saying “Hi” pointing out features and benefits of the home. Too many Realtors are hoping by just showing up, something magically will happen. Not likely.
Open house…could get writers cramp on that. A little trick i like to use when holding open house in a strata is this. Anyone who knows me knows that i train with da boys in tkd , full contact style. So i know some pretty big bro’s, bruisers if you know what i’m saying. So i ask me mate…hey bro wanna do an open house with me sumtime…i’ll take ya to lunch afterwards.
My Bro Dresses up like security, tells people to wait outside while i finish up with the people already inside n shit. Gets the names phone #,s e-mail…hands out flyers n stuff.
He dont mind cause we workin in metrotown district and 80% of the looky loos is fine young asian women ! anyways we have a great day and i end up getting great P R.
Remember 2 at open house is always better than one.
Love the photo & video.
I’ve always known there was controversy about open houses. While I recognize they rarely attract your buyer, they’re a good tool to prepare buyers to make an offer on some house … so likely it’s the process more than the single event.
It’s weird when the agent or the owners try to turn an open house into a full-blown party. It doesn’t have to be boring, but keep the attention on the property.
Jay, What you’re saying is spot-on. For my sellers who insist on believing weekly Open Houses will sell their home, I make sure to provide them with the stats and emphasize instead how pricing and presentation are more critical. Most get it, others still want to believe the myth that OHs are indispensable.