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The "Power" of Open Houses

Are They Worthwhile?

· Real Estate,Richmond,Virginia,New Listings,Open Houses

So. I came across this blog post on Active Rain, a real estate agent online community.

The title is "Do Open Houses Really Put a Sellers Best Interests First?" Ignoring the grammatical error in the title, which makes me a bit crazy, you can probably tell the author's answer is going to be a resounding "NO."

He gives three (3) main reasons:

  1.  The chances of selling your home at an open house are extremely small, 8% or less, per some research.
  2.  Real estate agents do not explain this fact - lack of sales from open houses - to their seller clients.  They also do not explain the risks of dual agency if the listing agent were indeed to pick up the buyer for the home at an open house.
  3.  The number of homes sold would remain the same, with or without open houses.  Therefore open houses are not worthwhile to sellers.

I disagree with the author's ultimate conclusion. Below I'll explain why open houses can be a good idea, in certain circumstances. And I am going to explain why I recommend open houses to all of my seller clients in this market.

First, I am aware of the research that says only a small percentage of homes sell as the result of an open house. However, I believe in a low inventory seller's market, like the one I am living in now, there is some value to the open house as (i) a motivator; and (ii) a convenience to the seller.

The Open House as Motivator

Right now, in the City of Richmond, many submarkets are experiencing extremely low inventory, leading to feeding frenzies around appropriately priced homes in good condition. If a prospective buyer comes to an open house and sees 2, 5, 10 other prospective buyers there, it may encourage him or her to get off the fence and write an offer.

Open House as Convenience

I believe part of my job is to make the selling process as painless and easy for my seller(s) as possible. Structuring the marketing plan in a particular manner and including an open house can make life easier for the sellers. How? First, an open house gives unrepresented buyers a way to get into the house quickly. Second, it gives prospective buyers who have already seen the house a way to get back into the house, perhaps with friends or family members who will be weighing in on the purchase. Lastly, it gives a window of time for interested people to get into the home, so it is not just the first person to the table with an offer that gets the house.

Marketing Plan with Open House

In an ideal world, I have a marketing process I would like all of my sellers to adopt. First, the house needs to be in tip top shape before photography can be done. Assuming the home is ready, I want professional photographs, and perhaps video and/or drone photography, to take place on Monday or Tuesday. I want my photos back by Wednesday, so the Multiple Listing Service ("MLS") listing can be drafted, circulated to the seller, and feedback and comments can be received. I want the listing to go active, after the seller's comments have been received and incorporated, on Wednesday, no later than Thursday. Showings may or may not be delayed, depending on the seller's particular circumstances. If they are delayed, I start showing on Friday, Saturday at the latest, and then hold the home open on Sunday. We review offers on Monday by X time, and hopefully have a ratified agreement by Monday night.

The benefit of this approach: The seller can make arrangements in advance to be out of the home for the days the home will be shown. This is great if your clients have pets, small children, or are elderly. It's easier to arrange and schedule showings when you as the listing agent have unfettered access to the home for several days. In my experience, the easier it is for agents to show a home, the faster that home is likely to sell. 

Now, I concede that this approach is so effective right now because we are in a strong sellers' market. It would not be nearly as effective in a buyer's market. But there still are reasons a seller could chose to have an open house.

I also concede that the open house does benefit the agent hosting the open, since they have an opportunity to "pick up" unrepresented buyers as clients. My best client, a repeat investor buyer and seller, I picked up early in my real estate career at an open house I was hosting for a more experienced agent. So open houses are definitely a great prospecting tool for agents. But I don't think that means they don't have benefits for the sellers as well.

Conclusion

It is absolutely the listing agent's job to explain the pros and cons of an open house to the seller. And it is absolutely the seller's choice as to whether to have an open house or not. There are many reasons a seller might forgo an open house. Some sellers do not like the idea of nosy neighbors and other "looky-loos" traipsing through their home. There may be valuable items in the home, such as jewelry or prescription drugs, that could be stolen. There are a 1000+ reasons. My conclusion, based on my experience, is in the absence of special circumstances, an open house would not hurt, and could only help.

As always, thanks for reading my blog. I welcome your thoughts, comments, suggestions. I would LOVE for you to suggest possible topics.

- Melissa

(804) 986-3993

Email: melissa@mikemelissa.com

URL: www.mikemelissa.com

Facebook: www.facebook.com/mikemelissarva

Twitter: @mikemelissarva

Instagram: mikemelissarva

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