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.