Sunday, September 23, 2007

The Truth about Open Houses

By Joel Persinger
YourRealEstateDude.com

When the market is hot and houses are selling faster than lottery tickets, you don’t see that many signs on the side of the road screaming, in giant letters, “Open House.” However, once the market slows and house sales begin to drag, real estate agents all over the place dust off the old, “Open House” signs and start setting them out on every street corner. With the current market downturn, agents can be found sitting in properties during open houses all over town on just about any Saturday or Sunday afternoon. But what exactly is an open house supposed to accomplish and why are agents more likely to do them when business is slow?

If you ask the average homeowner about open houses and the reason for doing them, the usual answer is something like, “Its how you sell a house.” Homeowners are almost universal in their “understanding” that real estate agents use open houses to get homes sold for their clients. In the sellers’ mind, holding an open house is an effective way to market property by getting as many people as possible to go through the home.

In truth, real estate agents use open houses for something entirely different: prospecting. When a brand new agent sets out on the journey to a career in real estate and joins his first brokerage, he is often given his first lessons in open houses. Have you ever noticed that many of the agents who are sitting on open houses are not the actual agents whose names are on the for sale signs? That is because the agents whose names are on the signs already have established businesses and the agents sitting in the houses do not.

New agents holding open houses are taught to look for opportunities with every visitor. They ask questions in an attempt to find neighbors who have stopped by out of curiosity and may be thinking about selling their homes, or buyers who may be ready to buy, but who cannot or will not buy the house they are holding open. Sure, it’s an added bonus if a buyer for the house being held open just happens to bop in, but the main focus of agents at open houses is prospecting for more business. By the way, it is a statistical fact that the chances of selling your house by holding it open are infinitesimally small. It is far more likely that any buyer who visits your open house will buy somebody else’s home. Hence the reasons why agents use open houses for prospecting.

For many years now, I have made it a practice to explain this painful reality to my clients at the outset. Surprisingly, most are actually quite happy to hear it. It seems that while sellers are convinced that open houses are a necessity in selling a home, they are equally convinced that open houses are a genuine pain in the backside. Consequently, they are usually relieved to learn that open houses are not quite the necessity they first believed them to be. Just the same, after their home has sat on the market for a month or two without a sale, even the most ardent hater of open houses starts clamoring to have them done. As testimony to this phenomenon, agents in my office held open houses for a number of my clients just this past weekend. My agents didn’t complain.

So if you want your agent to hold an open house, just remember that agents will happily do them for three reasons: to find more buyers, to find more sellers and to make you feel like they are doing something to get your house sold. Buried somewhere at the bottom of the pile of legitimate reasons they may have is the odd chance that the house being held open might actually sell as a result.

Thursday, September 20, 2007

Using the shotgun approach to house buying

By Joel Persinger
YourRealEstateDude.com

You may not have been aware of it, but September 1st marked the start of the hunting season for dove in California. Each year, hundreds of dads with young boys interested in hunting, take their sons to the range for a little warm up. Then, having had a little practice and a lecture of two on hunting safety, Dads around the state trot their lads off to the countryside to take a crack at what is for many boys their first hunting experience. Doves, like ducks are hunted while they fly. They are a fast, moving target. For all practical purposes, this makes them impossible to hit with anything but a shotgun.

If you have ever watched an old western, you may recall that shotguns at one time, were affectionately called, “scatter guns”. Unlike a rifle which fires a single projectile, shotguns fire a pattern of hundreds of small round balls called shot. The pattern spreads out and gives the hunter a better chance of hitting what he’s shooting at and, therefore, a better chance of having something to cook up for dinner at the end of the day.

It might surprise you to know that this “scatter gun” approach can also work well when buying a home. Just as the bird hunter fires several projectiles at once in an attempt to get dinner, a home buyer can make offers on several houses at once in an attempt to purchase a home.

This past week I was showing property to a client in Vista. She had looked at five or six homes up to that point, but had not found anything that really got her attention. However, she did find a little neighborhood that she felt was perfect for her needs. I rounded up some homes that were for sale there and that afternoon we went looking. Within an hour we found not one, but two homes she really liked. Both were in her price range and she told me she would be happy with either one. Following my advice, she wrote similar offers on both properties at the same time.

It only took one day for the reason I advised taking this approach to become apparent. I was on my way to show the homes in question to my client’s family when I received a call from the agent representing one of the sellers. My client had written low offers on both properties in an attempt to get the best price. This agent spent several minutes with me on the phone detailing her client’s rigidity regarding price and his insistence that the property sell for more. Not long after that call, I received a call from the other agent expressing her client’s feelings of urgency regarding the sale and a willingness to take steps to make the deal work. Had my client made an offer on only one property, she may well have been stuck with a rigid, hard dealing seller and have missed a golden opportunity all together.

If you’re thinking about buying a home, remember that you have the option of writing offers on more than one property at a time. Just like the hunter who improves his odds of getting dinner by firing more than one projectile, you might well improve your odds of negotiating the best price and terms by firing off more than offer. So, call your agent, get out your pen and don’t be afraid to write.