Many agents are asking “do open houses still work?” If you’ve ever wasted a Saturday afternoon at an empty open house, you’ve probably asked yourself this very question. And there are conflicting statistics about the efficiency of today’s open houses, so should you be investing your time in them? Or let them go?
In this post, we’ll answer the big question: Do open houses still work in 2020 and beyond?
But one caveat before we jump in: every market is different. What works in one market may not work in another. So take this information as a reflection of the US real estate market as a whole, but remember, results in your local market may vary.
Do Open Houses Still Work in 2020 and Beyond?
In short, open houses still work in certain ways but fall short in others.
Let’s start by looking at the shortcomings of open houses in the 2020s.
The Shortcomings of Today’s Open Houses
1. An open house will probably not sell the listing
Serious buyers and sellers search for homes online and contact a real estate agent when they’re ready to start touring homes. They schedule an appointment; they don’t generally attend open houses.
Open houses are more often attended by:
- people who are vaguely interested in buying at some undetermined point in the future,
- curious neighbors,
- and perhaps other agents who happen to be in the neighborhood
No one in these groups is likely to purchase the home. As US News reports, “it’s unlikely you’ll get an offer directly from an open house.”
But what about the recent report by Redfin, which shows that American homes with open houses sell for $9,000 more and spend 7 fewer days on the market? The problem with this study is that, while it may show a correlation, it certainly doesn’t prove causation. It’s likely that the agents for these homes held open houses because the homes were already desirable and would show well as open houses. There’s no evidence to indicate that the homes sold in less time for more money because of the open houses.
2. There may be safety concerns
One of the worst things about open houses is the exposure of the home (and everything in it!) to the general public. While not necessarily common, it’s not particularly rare for items to get damaged or go missing during an open house.
There are, however, a few ways you can minimize this risk:
- Have the owner remove items of monetary or sentimental value before the open house
- Require everyone to sign in so you have a record of all attendees
- If you (or the sellers) are particularly concerned, consider placing surveillance warning signs around the home. With proper notice, it is perfectly legal in most jurisdictions for sellers to set up video surveillance in the common areas of their homes. Even if there is no video surveillance, the signs may act as a deterrent, and as long as you are regularly watching the guests in the home, the signs aren’t dishonest.
Make sure your sellers are aware of the risks and the steps you’re taking to minimize them.
Ways Today’s Open Houses are Still Working
If open houses don’t sell the listing and may expose the sellers to possible theft or property damage, why do so many agents still spend their time on open houses?
Well, it’s because they’re still working in a few key ways.
1. Sellers generally expect them
First, when you’re competing against other agents for a listing, sellers typically expect you to hold an open house. To refuse may give your competitors an advantage in the eyes of the seller.
If you are dead-set against open houses because you feel they are a waste of time, you can try explaining the logic to your sellers during your listing presentation. You can present studies that demonstrate the fact that open houses are objectively ineffective at selling the listing.
But don’t expect your sellers to follow your logic. With so many anecdotes about homes selling because of open houses and misleading studies showing correlation (but not causation!) between open houses and desirable results, your sellers may be emotionally attached to the idea of an open house. And there’s no reasoning with emotion!
Regardless of whether or not you recommend open houses, it’s wise to manage seller expectations during the listing presentation. Be honest about the unlikeliness of selling the home directly from an open house. But then, if you or the sellers still want an open house, you can present your plan for making the open house as effective as possible.
This open communication strategy will give you a competitive advantage over other listing agents. The agents who taut the effectiveness of open houses will look like they don’t understand the market or know the facts. The agents who flat-out refuse to do open houses will look like they have given up (unlike you, the consummate professional, who has come prepared with a list of ways to make the open house more effective).
2. They attract new leads for the real estate agent
And now we’ve arrived at the real reason most agents still hold open houses in the 2020s: open houses generate new leads for the real estate agent. Open houses are one of the keys ways agents generate 5 new clients out of every listing!
Remember that list of people who actually attend open houses? Here’s how the groups benefit the host agent:
- people who are vaguely interested in buying at some undetermined point in the future: The agent gets to make contact early in the process before the buyers have an agent. When the lead is properly nurtured, they will eventually become a buyer client for that agent.
- curious neighbors: The agent can potentially get a referral from neighbors or become their listing agent if they’re curious about selling their own home. As an agent, you should be thrilled to invite neighbors into the open house. Ask if they know of anyone who might be looking to buy in the neighborhood (someone they would actually want as a neighbor!). And ask if they’ve given any thought to selling since the neighborhood has appreciated by x% over the past number of years.
- and perhaps other agents who happen to be in the neighborhood: it’s never a bad thing to meet your colleagues and competitors. Take the opportunity to network, compare notes, and maybe make an industry ally.
The Bottom Line: Do Open Houses Still Work?
Answer: it depends on your goal for the open house. If you’re using the open house to sell the listing, then frankly, no open houses don’t work. But if you’re using the open house to satisfy your sellers and generate new client leads, then absolutely!
But simply posting an open house sign in the yard and waiting for traffic probably won’t cut it. If you’re going to invest your time in holding an open house, you want to make it as effective as possible.
Here are a few ideas:
- Coordinate the timing of the open house to the timing of the listing. You generally want to get the listing on the market by the Tuesday afternoon before the open house weekend to give home search sites time to index your open house.
- Promote your open house across social media.
- Invite the neighbors. Again, those neighbors can be good lead sources!
- Put up multiple directional signs. You want to direct traffic from nearby intersections directly to your open house.
- Consider offering refreshments, prize drawings, or other incentives for people to attend.
With all of that, you probably still won’t sell that specific listing directly as a result of the open house. But you’ll certainly impress the sellers and generate more leads.
