If you’re going to list your home for sale, you’ll probably wonder whether or not an open house is necessary. Some sellers love them, others don’t. Some agents love them, and others don’t (there’s a lot of disagreement on this topic among agents). Statistically, fewer than 10% of homes sell from an open house. I’d argue that it’s closer to 1% are the direct result of an open house.
Open Houses Target Lookers, Not Buyers
There’s a long buying cycle when purchasing a home. In almost every case, that cycle begins with searching online for homes. At some point, as future home buyers get closer to buying, they will take the next step and visit open houses. This is a good opportunity to visit homes and tour neighborhoods without having to talk with a lender about loan options and pre-approval and without having to commit to working with an agent. These future home buyers are usually 6 months to a year away from buying a home.
Buyers who are actively looking and ready to make an offer are almost always working with a real estate agent. Their agent can schedule a private showing at any time. When one of these buyers loves your home and has to see it, they have their agent schedule a showing. If they’re ready to buy but aren’t working with an agent yet, they won’t hesitate to schedule an appointment with any agent who will show them your house. Buyers who are ready now make appointments. If there will be an open house they may attend that instead, but if there isn’t an open house scheduled and they need to see your home, they will arrange a showing.
Open Houses are usually advertised with signs. Personally, I like to have 6-10 out, depending on the specifics of the neighborhood. Having a lot of signs draws a lot of attention. When guests come to an open house I ask them if they found the house online or if they just happened to see the signs. When guests came in only because they saw they sign, it’s out of curiosity rather than to see the specific house. Rarely will they know the price or if the size, features, and amenities are what they’re looking for. They’re curious and/or killing time.
One of the main reasons that real estate agents host open houses is that the lookers will probably become buyers at some point so it’s a great way to meet new clients.
Open Houses Won’t Help Sell a Home that isn’t Selling
Many sellers like to have open houses because it’s an opportunity to promote the house. When a house isn’t selling, sellers tend to ask for an open house to be held or ask for regular open houses to be held. This rarely, if ever, leads to getting the home sold.
There are diminishing returns as more open houses are held. Open houses see the most traffic in the first week. After that, fewer and fewer people will visit. A second open house will usually bring in about 20-30% of the visitors that came in during the first open house. If there were 10 groups the first week, there will likely be 2-3 groups the next week.
It’s easy to make the leap that “exposure” is the problem, but active buyers are looking online and getting alerts of listings from their real estate agent and 2-3 home search sites like Zillow and Realtor.com. As long as the home is available through those channels, it’s not likely that it’s a secret that the home is for sale.
Will Open Houses Sell Your Home?
My philosophy is that you don’t need to have an open house to sell your home, but an open house can help. Some sellers prefer not to prepare their home and leave for the afternoon just in case a ready buyer walks in. Others don’t like strangers having open access to their home (it is an open house, so it’s open to all). If a seller prefers not to have an open house, I’m ok with that. Many sellers choose not to have open houses.
When the home is suited to an open house (some are better suited than others) and the seller does want to have an open house, they can be beneficial. The best strategy that I’ve found is to list the home mid-week and hold an open house on the first Sunday for 2-3 hours. Serious buyers will see that there’s an open house and they will call their agent right away to make an appointment and get in before the open house. Many serious buyers will want to get an offer in before the open house or come back during the open house for a second look.
If the home hasn’t sold before the open house and there’s a lot of traffic, potential buyers will see that and they will know that they have to make an offer quickly, before someone else does, and they will have to make a strong offer since it’s clear that others are interested.
But, what if nobody shows up and no appointments are scheduled before the open house? This is another reason that I like to hold an open house on the first weekend . . . Instant market feedback. If only a few people, or no one at all, shows up at your open house then something’s wrong (as long as there’s activity in the market). If the home has professional photos, exposure on the online channels, and is easily accessible to potential buyers online it usually means that the price it too high. If this is the case, the seller will know within days instead of weeks and can adjust accordingly.