Open Houses in Real Estate – Still Worth it?

Written by Posted On Tuesday, 24 December 2019 22:28

Having an open house to show off your property has been a standard sales technique for decades. An open house gives potential buyers an up-close and personal look into your home and helps them envision themselves and their family living there. But with virtual tours, expert home photography and people moving farther distances, is the idea of opening up your house to strangers on the decline?

The story behind open houses

According to the National Association of Realtors, open houses started as early as the 1910s, but were referred to as being “open for inspection.” These events could last for days or weeks and gave interested parties an opportunity to come and check out the property. By the 1940s, open houses became a marketing tool for relators, and once service men came back from World War II, the real estate landscaped exploded.

The term “open house” was coined in the 1950s and Sunday become the most common day to have them, but no business was able to be done on Sundays, so it was used as a chance to compile a list of potential buyers to contact during the week.

Fast forward to today and not much has changed to the open house concept. Even with new technology, open houses still have many of the same traits that they did back in the day.

The pros and cons of using open houses to sell a property

In recent years there has been some indecisiveness within the real estate industry regarding the usefulness of open houses. Here are the pros and cons:

Benefits of an open house

  1. Attract first time home buyers – Buying a home can be a very intimidating and stressful process, especially if it’s your first time. A first-time potential buyer may drive by an open house, decide to stop in and end up asking the realtor questions to help them better understand the home buying experience. If the potential buyer seems really interested, the agent could end up representing them on another house, or even help them connect with a mortgage broker to find out what kind of mortgage they could be approved for.
  2. Ultimate exposure – As with selling any product, exposure is the key. An open house allows people to not only see a home, but they can visualize where their own belongings would go, or picture their family having special moments there. An open house gives a home the best chance for potential buyers to get an intimate look into something they may want to purchase.
  3. No pressure to buy – No realtor expects someone to walk into an open house, look around and declare, “I’ll take it!’ That only happens in movies. The truth is that there is no pressure. It’s just an opportunity for potential buyers to see what’s out there and offers a great opportunity to see what style of home they prefer.
  4. Helps non-visual buyers – Not all buyers are visual and for some it may be difficult to tell from pictures or videos how a home is laid out or how it flows. These potential buyers may need to see and feel a property in person.

Problems with open houses

  1. Unqualified buyers – The first major step in house buying is that the potential buyers have been approved for a mortgage, but not all the people who attend an open house are qualified to buy. Many cannot afford the house, and some are not even in the market to buy. Some people are just curious or want to kill time. This can result in wasted time for both the real estate agent and the home buyer.
  2. Tiny chance of a sale – It’s believed that less than 3% of homes are sold based on the result of an open house. A sale usually transpires after one or multiple private showings. With a private showing an interested party calls, requests an appointment and then tours the home. With a private showing, the buyer already has a real estate agent and they both commit their time to the process, which is why this route is more likely to lead to a sale than an open house.
  3. Security and theft - Since there is no screening done beforehand, literally anyone could be walking into an open house. This can give a possible thief a closer look at a home’s security measures or lead to someone stealing possessions from the home. Imagine leaving your front door open and inviting anyone that walked by to “come on in!” Seems crazy, but that is essentially what an open house is.

So, do open houses work?

According to a 2019 study conducted by the National Association of Realtors, homes that held open houses sold on average for around $9,000 more, and were on the market for roughly a week less. Open houses should be just one of many tools used to sell a home, and your real estate agent should use this as well as many other techniques to sell your property.

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