The question of open houses and their legitimacy for selling homes is a question that has been asked by real estate agents and consumers for over a hundred years. However, the question of “do open houses work” is one that should be looked at through a different lens depending on the goal that is trying to be achieved by the real estate agent and the seller.
According to a Zillow report, a decent percentage of sellers in urban areas, suburban areas and rural areas host open houses, which suggests that the perceived value of this selling strategy is high.
Again, it should be looked through the lens of who ultimately benefits.
What is an open house?
An open house is an event that takes place by a seller or real estate agent where people in the general public are invited to tour a home. Generally, they occur on the weekend and start in the morning or afternoon and last a few hours. Sometimes agents provide snacks and beverages to help increase attendance numbers when they open the home to the public.
Agents usually market their open houses in a variety of ways including flyers in the neighborhood, signs, and internet advertisements to attract potential buyers.
People that attend open houses are usually:
- Neighbors – A lot of nosy neighbors like to attend an open house so they can see how a house for sale compares to their house.
- People passing by – Many open house attendees are just people who so happen to be walking by and need something to do.
- Other real estate agents – Sometimes, agents attend open houses to keep up to date with what certain areas are like.
- Future home buyers – These might be people that are looking to buy in a year or two but want to get a feel for what’s in certain neighborhoods.
- Existing sellers – Some sellers like to see homes that are comparable to theirs in an effort to determine if they are priced accurately.
How open houses benefit agents
Many agents will tell a home seller that open houses are effective in an effort to benefit their own business. A listing agent will often want to hold an open house as a way to connect with other agents and collect buyer leads.
For an agent to be successful at real estate, they must collect as many quality leads as possible and an open house is a creative way for the agent to meet potential buyer lead goals. From there, the agent can collect contact information of their leads in hopes of getting future business.
Open houses help the agent because it increases the perceived value that they are bringing to the seller which inherently leads to referrals and less questioning of the commission they are being paid.
How open houses benefit sellers
According to a report by the National Association of Realtors, only 4% of buyers said they visited an open house before purchasing a home. So they aren’t a very effective way to sell the house.
However, open houses create a perceived image of the popularity of a home to the general public. If there are a lot of people attending an open house, this can help the seller gauge the general interest of their property which might translate to the general interest on the open market. Additionally, an attendee might recommend the home to someone they know looking to buy a home.
If an agent recommends an open house as a way to sell, they are probably trying to use it as a way to generate leads. This isn’t a bad thing, and an open house can only help sell a property rather than hurt. Even if the chances of it working are small.
What actually sells a house?
According to NAR, over 52% of homes sold are initially found online by prospective buyers. In order to effectively sell a home online, a seller should ensure that their real estate agent does the following at minimum:
- High quality photos – While potential buyers are browsing the internet for their next home, the first thing they are going to do is look at photos of the home. These need to the highest quality possible so buyers aren’t deterred from the listing.
- Virtual walkthroughs – This is a relatively new way to show potential buyers a home. It allows a user to look around a home on their computer in a 3D manner. They can look up, down, left and right as they “walk” through a home online.
- Advertise the home – The home should be at minimum advertised on the top real estate sites such as Zillow, Trulia, and Realtor. If the agent goes over the top for their clients, they will spend some money advertising it on social media on their behalf.
A private tour is the next step in the funnel after advertising the home. A private tour is where a buyer and their agent tour the home together. Sometimes the seller and their agent can be present so that they can effectively point out elements of the home.
People that are touring a home personally are higher internet buyers and 51% of sellers think it’s a good idea to get a count of these people in determining the demand for their home. Likewise, 79% of buyers attribute a private showing as very important in making a decision to purchase a home.
While open houses have a low chance of working, they can’t hurt if your agent is recommending one. However, it’s more important for them to focus their attention on taking good photos, advertising the home properly, and ensuring it shows well in a private showing, rather than spending time hosting open houses.