Sunday is open house day for the city of Madison real estate…
…and pretty much all of Dane County real estate. Real estate agents and FSBO’s all post directional signs, run ad’s and make sure their home for sale is show ready. Realtor’s and For Sale By Owners do this in the hopes that a buyer might show up at the open house, take a tour of the home, fall in love and write an offer.
A buyer to find open houses has to check many resources; broker websites, fsbo websites, craigslist, classified ads or drive around in the neighborhood and the locale they desire to relocate to. This is time consuming for the buyer and expensive now that gas prices are over $3.20 a gallon.
National Association of Realtors (NAR) reports that only 3% of homes sold come from a buyer walking through an open house. That’s not a great success ratio, so why would a real estate agent go to all that time and work when there is only a 3% chance that the open house will bring a buyer in that will buy that property? The real estate agent is getting to meet buyers. Buyers. Period. Buyers for any property. An open house is good time spent for a real estate agent’s business but that doesn’t mean it’s a good way to spend time for getting that specific home sold.
For a FSBO, the time of an open house is an even bigger waste. The real estate agent has many homes that they can show buyers, that FSBO is only trying to sell one. A FSBO holds their home open for 3 hours on a Sunday afternoon for strangers to come through and even if those strangers are going to buy, there is only a 3% chance that they are going to buy the FSBO. But if a real estate agent meets some people, at least their data base and direct marketing list got bigger.
Master blogger and exceptional professional Realtor, Teresa Boardman of St. Paul Real Estate Blog mentioned in one of her blogs
Open Houses were great in the old days of the 1990’s for selling real estate, but buyers now have multiple photo’s on the internet, virtual tours, and all the neighborhood info they desire right at their finger tips online. If the buyer is truly interested after doing their homework, they will set up a private showing.
If you are a seller and you are still insisting on having your real estate agent hold an open house make sure they do an effective open house. Even if your real estate agent is aggressive, strategic and creative all you might have is nosey neighbor’s stopping in.
But hey, maybe THEY know someone that want’s to move into the neighborhood!!!
15 Comments
May 15, 2007 at 6:42 am
Do Open Houses Sell Houses?
Sure, I’ll bite. Let’s do the numbers a different way. Let’s make the math easier and say that 5% of houses are sold via an Open House. So, does that mean if I get 20 people to come to my Open, I get a buyer? Should a Realtor stop using marketing tool that “only” sells one in 20 houses?
A different tack…ever drive by a car lot on Sunday? How many people are wandering the lot, reading window stickers, peering inside cars, walking the inventory. How many cars does that sell? LOTS I’ll bet, but not on that (or any) Sunday.
How many house sales can be directly attributed to a newspaper ad? Each ad. The same ad that runs week in and week out. How should we count that sign in the front yard…just one sign but it sits there day after day, week after week, month after month, year after…What about those highly effective “Just Listed” postcards…or my favorite, how many houses are sold by a “Just Sold” postcard? How many hits on a website before a house sells? My observations on FSBOMadison indicate that 2500 and up is a common number even taking in to account those who reset their counter. And if I had to to guess how many houses are sold by tuning in on AM radio and listening to a scratchy description of the house I can see, I would stretch and say “one”.
At the risk of yammering on and on, I will submit one more comment about what constitutes ‘effective marketing’…ok, two. How effective is showing a house? How many showings before your house sells or a buyer buys one? If 20 people set up showings but none buy, should we quit taking showings? If a client sees 20 houses and hasn’t bought, should they give up because viewing houses “isn’t effective”?
No matter how effective your marketing, how high-tech your website, how smooth your agent, etc….99.99% of home buyers will not buy a house if they can’t get inside. If they can’t open the closets, look out the window, stick their head in the garage, size up the bedrooms, criticize the color of the paint…they won’t buy it. Thus the “OPEN House”.
May 15, 2007 at 10:47 am
Paul,
Thanks for the comment, or maybe even your own post? In any type of business, game, or life situation, its about being “effective” right? Would you rather have your realtor spending time doing something MORE effective or LESS effective, to get your home sold?
May 18, 2007 at 4:36 pm
Open Houses like anything are what you make of them. Most agents seem to agree on somewhere between 1-3% of homes being sold directly from an open house. With any type of advertising it can be really hard to pin down the exact reason for a sale. As a REALTOR in the Madison, WI area I have found that having houses open does give people the opportunity to drop by and view the house…and maybe tell a friend or relative or neighbor about it. True, most homes are sold from private showings with a REALTOR however sometimes an open house might be just what is needed.
May 21, 2007 at 11:10 am
Open Houses are like speed-dating for Realtors and Buyers. What better way to find out if you can stand spending time touring available property with the other party than to spend a few minutes, well, viewing an available property with the other party.
Last time I bought shoes, I tried ‘em on first. Next time I buy a house, I’ll try a few on first too.
May 21, 2007 at 11:32 am
Billy,
Thanks for stopping by and leaving a comment. I am guessing by your comment that you are not a Realtor, so that would make you the first consumer to comment on this article. Congrats!
Interesting analogy “speed dating”. So you are suggesting as a consumer, that it is your way to “interview agents”?
July 8, 2007 at 10:47 am
I don’t think conducting an open house is a total waste of time. It’s a great opportunity for me to take a nice, quiet nap!
July 9, 2007 at 12:03 pm
Ha! Thanks for the light-hearted approach to this blog Kermit!
Some other Realtor’s are really in protest about this. Giving facts and figures and justifying why open houses work.
If all it took was an open house I would suggest everyone go FSBO.
July 14, 2007 at 1:01 pm
In response to Paul’s comment/post, I would say he’s right. It’s extremely hard to sell a home without being able to go inside. However, there is a way to “get inside” without having a agent throw open the doors and sit all Sunday long, waiting for that “lucky” prospects to walk in.
I believe if you can not qualify your leads ahead of time, then ‘open house’ tactics are a waste of time. If you can show prospects 90% of a home (inside and out), before they even drive down the road, you will close them at the showing of the home.
Why? Because you gave them all the information they needed ahead of time and when they see the home for themselves (and if it’s everything they hoped it would be) then you will close the deal.
My experience of driving all over town to find the perfect home was tiresome and discouraging, I wish I had more pictures and more information. Take a look at this listings tool and see if it makes sense. http://www.advertisingagency1.com/
realestatesalestool.htm
Hope this saves people and gas.
July 22, 2007 at 9:22 am
It is refreshing to see an agent tell the truth of open houses. I applaud you for that. I own a FSBO publishing business in Springfield, MO but I lived in Appleton for 9 years working most of that time in the mortgage biz and am very familiar with the real estate industry in WI. My experience here is that agents, for the most part, do everything they can to keep sellers in the dark, which is partly why I started my biz. Keep the “truth” flowing!
July 22, 2007 at 3:30 pm
David-
Thanks for stopping by. The site you linked to is kinda confusing. I’m not sure what I’m looking for and won’t know then if I found it.
Jim-
I’m going to check out your site, feel free to stop by and comment often. You said “agents, for the most part, do everything they can to keep sellers in the dark”.
What do you think about the role mortgage brokers play in a transaction?
August 4, 2007 at 3:20 pm
[...] Why would we hold an open house after writing such articles as “Wasting Time At Open Houses”? [...]
September 9, 2007 at 8:06 am
[...] Are you wasting time at your open house? [...]
October 3, 2007 at 7:52 am
[...] Wasting Time At Open Houses [...]
December 15, 2007 at 1:30 pm
9 of the last 12 houses I have had listed sold because of a open house. If done right it is the best selling tool in a down market.
October 7, 2009 at 5:10 pm
Open homes, are great for the buyers, its the method of promoting the open house thats the issue, why would you spend thousands of dollars on advertising in the weekend paper, to have a hoard of time wasters come through. We at TPC only wont to talk to real buyers not the clowns that have nothing better to do on a weekend. By apppoinment is much better, all this can be advertised on the net.