Do Open Houses Work?
“In my experience, there is no correlation between houses we hold open a lot and houses we do not hold open at all and how fast or at what prices they ultimately sell for,” claims an unnamed real estate broker at zillow.com.
Then, there is real estate “scientist” Tim Ellis’ analysis of a study performed by a large real estate conglomerate. In San Francisco, he claims, “holding an open house is so expected there that homes that don’t hold an open house are a full seven percentage points less likely to sell than those that do.”
So, which is it? Do open houses help sell homes or are they a waste of time? Let’s take a look at both sides of the question.
Home sellers and their listing agents often hold opposing views on whether or not to hold an open house. The homeowner believes that holding the home open to the public exposes it to a broader pool of potential buyers.
The real estate agent, on the other hand, will typically hold an open house not only to lure in potential buyers but to attract more clients as well. In fact, skeptics of open houses will say that the real purpose of the guest register by the front door is part of the agent’s attempt to pick up new clients.
Then, there are others who claim that busy agents with lots of clients generally feel that open houses are a waste of time.
A hunt for research into the effectiveness of the open house as a home sales tool highlights the lack of available information. The National Association of REALTORS® finds that 45 percent of buyers use the open house as an “information source,” but fails to mention the percentage of these folks who actually purchased the home.
The study that Ellis analyzed finds that geographic location has a lot to do with whether an open house will sell a home. As mentioned earlier, San Francisco homes that are held open are more likely to sell than those that don’t have an open house.
In Las Vegas, on the other hand, only 3 percent of homes are held open, so naturally, homes here are more likely to sell without an open house.
“Everywhere else, the picture gets a little more fuzzy. In the other eight markets we examined, there was virtually no difference in the percentage of homes that sold, whether they had an open house or not,” Ellis claims.
One additional finding is worth noting: Homes that are held open during the first week of the listing period are 13 percent more likely to sell than homes not held open at all.
Furthermore, the likelihood of a sale doubles if the agent skips the first week and holds an open house later during the listing period.
Overall, this particular study shows that an open house is a must if you live in San Francisco and it’s a waste of time for Las Vegas homeowners. What about everywhere else? “It likely doesn’t really matter. . .” says Ellis.
Just as some hair stylists cut hair better than others and some lawyers are brilliant in front of a judge while others fall apart at the thought of it, some real estate agents are better at holding open houses than others.
Therefore, whether an open house “works” or not depends not only on the agent’s skill set, but on geography, seasonality and a host of other conditions.
Overall, it is effective marketing that sells a home and the most potent weapon in your marketing arsenal is your real estate agent. Whether or not he or she lists open houses in the marketing plan should have less to do with the agent’s effectiveness than their overall marketing chops.
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