John Kelly
(651) 238-5649
john@johnkellyonline.com





Do Open Houses Work?

 

I hold a lot of open houses. And I have a lot of reasons for holding them. Some of the reasons help me more than they help my sellers. But after I disclose all of the pros and cons about open houses, most sellers in the Twin Cities real estate market see a number of benefits to having open houses, and listing their home with an agent who holds lots of them.

But first let's talk about the benefits to me. I held an open house last Sunday from 1:00 to 3:00. My seller spent the entire morning cleaning the house and doing all of the things that my home stager suggested. Seven groups of people came through the open. But not one of them was interested in writing an offer on this property. A look at my notes reveals that the first two groups through were "nosy neighbors" who were only interested in what they will be able to get for their homes in the next year or so. Next I met two people who were "just looking" and have no interest in buying anything any time soon. I also met two couples who were just getting started looking, and expect to be getting more serious in about four months. Finally, I met one single woman who loved the home, wants to buy something soon, but only qualifies to buy homes in a significantly lower price range.

So I gave up a good chunk of my Sunday, and didn't sell anything. But I did meet five different prospects who could be a source of future business for me. Unfortunately, as useful as they are to me, they are much less useful to my seller. In fact this is why many sellers and also many agents don't like open houses. Sellers especially are beginning to see them as a waste of time and effort on their part. They believe, for some good reasons, that their agent doesn't see much chance of Twin Cities open houses leading to a sale. And that many agents just use open houses to capture more leads.

So how did my seller benefit from this open house, and why is she excited to have me hold more of them? Well first of all she came home to a really clean house!! Which isn't as trite as it sounds, because a private showing was scheduled for the next morning, so she had to clean it anyway. More importantly, her open house was advertised in the St. Paul Pioneer Press, the Twin Cities MLS, and hundreds of websites, including our competitor's websites. So sellers are able to get a lot of exposure by having an open house. Many of the best, most motivated buyers are already working with a buyer's broker. So they might notice the open house on realtor.com, or my website, or a competitor's website, but then have their agent arrange a private showing. It is hard to track this kind of data for Twin Cities open houses, but I believe my sellers get more private showings in the days immediately following a well advertised open house.

The feedback that agents receive at an open house is also very valuable, provided you know what questions to ask. Of course I prepared a CMA before we listed the home, and I had a professional home stager  help us get the home ready for showings, so my seller and I already knew what we thought of the home. But it's always good to hear the opinions of people who can be completely impartial. For example, the two "nosy neighbors" have looked at every single home that has recently been for sale in their neighborhood. I used many of those homes as comparables when preparing the CMA for my seller, but of course I hadn't physically been inside every one of them. The nosy neighbors felt that my listing was a cleaner, more updated, and a better value than the other homes they had seen. I got similar responses from the other people who came through the open, and it helped my seller and I feel even more confident that we are priced where we need to be. Similarly, when you host a well advertised open house and nobody comes, you need to be prepared to find out why that happened. It is no fun telling a seller that nobody came to their open house. But it is one of several factors I look at when trying to help sellers decide if they are appropriately priced. And the bottom line is that if nobody comes to your open house, it might tell you more about what you are offering than it does about the concept of open houses in general.

I think many of the people who say the most negative things about open houses, have been trying to use them to do something that can't be done. In today's real estate market in the Twin Cities, over-priced listings just don't sell. Holding an open house on an overpriced listing will not sell it, no matter how innovative the advertising. Instead of saying the open houses didn't work, these sellers should realize that their unsuccessful open houses gave them some valuable insight into what they need to do to get their home sold.

So back to my seller. She is convinced that we are well priced and that somebody is going to buy her home. And she wants to expose her property in as many ways as possible including open houses. Finally, she knows that I do two more things that help me sell more than my share of open houses. First of all I charge a discounted real estate commission which allowed my seller to price her home attractively; so I am holding an open house that has a real shot at selling. Secondly, I charge even less when I can sell my listing myself and not have to pay a buyer broker. This means that my seller could save enough money to enable her to accept an offer that she would find unacceptable if she were paying a larger commission. Even in this slow market, the Twin Cities are full of buyers who just can't quite afford the kind of home they want. When one of these buyers comes through an open house of mine, I get them to put their offer in writing. Then by charging my sellers several thousand dollars less than they would otherwise have to pay, often I can put together a transaction that works for everybody.

Bottom line: If your home is overpriced, you could hold it open every day for the rest of your life to no avail. On the other hand, if you are trying to price your home competitively, an open house is one way to expose your home, get you some helpful feedback, and maybe find a buyer for you!!

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