Open Houses - Are They Worth It (Sellers Beware)?
It is pretty amazing how many open houses are still held these days despite the overwhelming data indicating how ineffective they are. Just examine the statistics from the National Association of Realtors (NAR). The NAR publishes yearly statistics to inform its membership of trends in various sectors of the industry.
The general public and agents alike benefit from these statistics because they tell a very compelling story with regard to what works and what doesn’t work in marketing real estate. One question the NAR asks survey participants is, “where did they find the home they purchased”? For years 2006-’07 the amount of homes sold as a result of an open house was less than 1%! That’s right, an insignificant amount sold as a result of an open house. Incidentally, only 5% of buyers found the home they purchased in newspaper ads according to the same survey.
Years ago, before cell phones, Internet, and personal computers, homes were marketed basically by placing ads on printed media (newspapers & magazines) and by hosting open houses. In others words, prospective buyers searched newspapers and drove around neighborhoods looking for open houses to visit when looking to buy real estate.
According to the NAR, 80+% prospective buyers are searching the Internet first when looking for buying real estate in recent years. So, why are we still spending time and money on open houses and newspaper ads when the majority of buyers are on the Internet?
Let’s pause for a moment and talk about newspaper advertising. Why do you think that newspapers are experiencing record loses in recent years?
That’s right, newspapers and the printed media industry, are having loses because advertisement dollars are being spent elsewhere (like the Internet). Why? Because customers are no longer reading newspapers like they used to – they are now on the Internet! Call the advertisement department of a company and ask where they are spending their advertisement dollars and in what proportion.
Let’s return to the question above – why are we still spending time and money on open houses and newspaper ads when the odds of selling the home are so small? In my opinion, there are four basic reasons. The agent …
has been mentored by “old-timers” in the industry (that have not kept up with technology and new marketing methods) and consequently have not learned modern marketing techniques
has failed to implement modern marketing techniques
has failed to educate their clients and set expectations
benefits from it, even though the benefits are insignificant
1. Agents mentored by “old timers” obviously do not know how to use technology to help them market a listing. They simply continue to use the same methods as their mentors without realizing that their mentor built the business using effective marketing methods in those days. Assuming that “what worked then must work now” is obviously a flawed argument.
2. Others are aware of new techniques but simply fail to spend money in these new ways of marketing. These new ways refer to tools, software applications, video and audio technologies, telephone systems, computer systems, professional websites, syndication, etc.
Would you entrust the sale of your house to an agent that has a free e-mail address and no professional Internet exposure? Or, would you rather list your house with a professional agent that invested in a website linked to other highly visible websites, use communication advancements, and other technical tools to increase the odds of selling your house?
Agents in this category obviously would favor open houses. Let’s face it; doing an open house is almost free to the agent. They put an ad in the newspaper, sit for 2-3 hours and the seller gets the impression that the agent is working hard to sell their home.
3. Agents that have added technology into their businesses fail to educate their clients of the benefits of technology. This is a major mistake many agents make. Unless the seller is told about the benefits of using a particular marketing method, they will assume that nothing is being done to get their house sold. Communication is key.
Newspaper ads provide no feedback as to how many people noticed the ad or even read it. Internet websites allow you to obtain statistics. What a powerful tool to show the seller! Use the technology to communicate how the seller is benefiting from these new methods.
4. SELLERS BEWARE!!! That is correct, an open house benefits the agent, not the seller. This is one of the best-kept secrets in the industry.
Please read the following quote from an article written in November 2007 by Rory Wilfong, called “Agents: Making Open Houses a Success”. Rory Wilfong is a respected real estate sales coach and trainer. This article was addressed to Realtors® not the general public.
“… The sole purpose of an open house is lead generation. The odds of selling the home to someone coming to your open house are slim to none. The open house is intended for you to meet people who will have a real estate need in the near future (immediate to 2 years) so that you can make a lasting impression, stay in touch with them regularly and become the trusted expert they turn to for real estate advice. …”
Therefore, the reason the agent (not the seller) benefits from an open house is that it is used as a vehicle to get leads (listings and buyers). Read what Adam Waldman, another respected agent in Long Island, wrote in July 2008 in his article called, “Open Houses: Are They Worth It?”
“… But who really benefits from the open house? The seller? Sellers may believe that open houses are a necessity because it is tangible to them. But what most sellers don’t realize is that the agent is the one with the most to gain, as they use open houses to find buyers to work with.
Usually, the seller will leave the house excited about the possibility of finding a buyer in the 2-3 hours that they will be gone, only to come home and find that few, if any, people came to view the home. Ultimately, disappointment sets in, and eventually frustration. …”
Let me close with the same question I opened this article. Open Houses – Are They Worth It (Sellers Beware)?
If I was going to be inconvenienced, by leaving the comfort of my home, just to have an agent sit for 2-3 hours looking for leads when the odds of finding a buyer for my house are “slim to none”, I would be pretty upset.
Remember, you (the seller) are paying the commission to the agent marketing your house!
What would I do?
I would demand from the listing agent a detailed marketing plan. I mean, insist in details about technologies, about how they run their business, about references, etc. Let’s face it, IT IS MY MONEY! I would make sure that the money I pay in commission is being used wisely and in the most effective way to find a buyer for my house.
If the agent says that he/she would hold an open house every week, LOOK OUT! An agent sitting for 2-3 hours in your living room can’t be looking for buyers with other more effective methods. The odds of success – LESS THAN 1%.
What would you do ….?
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