Is This the End of Open Houses?

Written by Posted On Tuesday, 14 April 2020 05:00

When the coronavirus shutdown hit Canada’s real estate industry, open houses were the first thing to go. Real estate firms and associations first recommended to their agents that they stop holding open houses. Then they insisted. In Ontario, the government banned open houses as part of its emergency orders.

Many in the real estate profession believe that it’s about time and that open houses should have disappeared a long time ago.

“Just like the milkman, the payphone and ketchup bottles that are not inherently upside down, open houses are becoming outdated,” says a blog of the website of Frank Leo, one of Canada’s leading sales reps. Leo, who is with Re/Max West Realty in Toronto, doesn’t hold open houses but he does spend a great deal of money on advertising in print, television and radio. In his advertising he says he became a top agent “without ineffective open houses.”

“With over 90 per cent of home buyers starting their research online and in print, we need to ask ourselves, why are we still having open houses,” says Leo’s blog. “Instead, our focus should be on preparing your home for pictures and the ads online and in print.”

During the COVID-19 crisis, using technology to hold virtual open houses has become more widespread. If you haven’t checked out online listings that include 3D tours, you may be amazed at how well they show off a home. It’s like using Google Street View – you can walk into each room, look up and down, and stop and look out the window if the blinds are open. You can do everything that people do at an open house – except open closet doors to snoop inside.

Other improved methods now used widely on listings are high dynamic range photography and panoramic views.

So will virtual open house technology eliminate the traditional open house once the coast is clear and we no longer have to worry about social distancing? Probably not, judging by the number of Realtors who believe open houses are an important part of their marketing plans.

Opinions on how many homes are sold via open houses is split.

“Only about five per cent of sales will occur through an open house,” says the blog of the Team at Re/Max Real Estate Centre in Guelph, Ont. “However, if open houses are done right, they can be a very effective marketing tool for your property. For example, our team sells about 15 per cent of our houses through open houses, which is pretty significant.”

Gord McCormick, broker of record at Oasis Realty in Ottawa, says on his blog, “We believe that at least a third (perhaps more!) of our listing sales have been generated out of buyer activity around open houses. All parties benefit from this activity and we can’t understand why some tend to downplay their value.”

The BREL Team in Toronto says on its blog that in 2019, more than 40 per cent of people who bought houses they had listed attended one of their open houses. “That’s a lot of buyers to miss if you decide not to have one. Point is: our job is to sell your house and we want every opportunity to tell everyone – including buyers already working with agents – how great your home is.”

A U.S. study by Redfin in 2019 determined that “homes with open houses sell, on average, for
$9,046 more and spend seven fewer days on the market than homes without open houses.” But the company adds, “The premium may have more to do with the desirability of the house itself and the way it is marketed than the open house itself.”

Daryl Fairweather, Redfin’s chief economist, says, “In many areas, homes that are already primed for competition tend to the be ones with open houses because the listing agent knows it will attract a lot of attention and wants to set up a convenient way for multiple potential buyers to pop in at once instead of making several appointments for private tours.”

The pros and cons of open houses have been subject to endless debate in the industry. On the “con” side, Leo says, “Real estate agents know that open houses don’t bring in many buyers, just lookers…Sometimes Realtors will hold an open house simply to please their clients and show them they are putting in the work. Other times Realtors will use open houses as bait to meet prospective buyers just so they can push other properties for sale or generate leads for their own business. Would you like your home to be used as bait for a Realtor or other home sellers’ gain?”

If visitors are not properly supervised, there’s always concern that the home could be damaged or items could be stolen. Most agents have a horror story about visitors’ kids running wild in the house, jumping on beds and playing with the homeowners’ toys. If a homeowner values their privacy, the last thing they want is a bunch of strangers – or their neighbours – coming through the home.

But some agents welcome the neighbours and even encourage them to come.

“Nosy neighbours aren’t necessarily a bad thing,” says the Team. “A lot of the time your neighbour will know a friend or family member that wants to get into the neighbourhood. Also, they’re your best advocate for your neighbourhood. I can’t tell you how many times I’ve been at an open house talking to a prospect from another city and one of the neighbours has walked in and started selling the neighbourhood to that client…. It’s a huge advantage to you.”

McCormick says, “Buyers like open houses because it gives them the opportunity to browse properties without engaging their Realtor. Many buyers get their inspiration by seeing properties in person and open houses provide a great vehicle for this kind of buyer. This is the ‘I’ll know it when I see it’ buyer. Some buyers also prefer to direct their own search independent of a Realtor and engage a Realtor only at purchasing time…..In many cases, open houses are the only way to attract these kinds of buyers.”

The BREL team notes that in Toronto, many condominium buildings do not allow open houses, so virtual tours on listings are more important.

But for most properties, the team says, “Getting the highest price for your home depends on exposing it to as many potential buyers as possible – and open houses are one way to do that. Great real estate agents recognize that hosting an open house is part of a comprehensive traditional and digital marketing strategy.”

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Jim Adair

Jim Adair has been writing about Canadian real estate, home building and renovation issues for more than 40 years. He is the former editor of Canada’s leading trade magazine for real estate professionals, as well as several home building, décor and renovation titles. You can contact him at [email protected]

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