Do open houses really sell homes?
Jen Geisinger, the Minneapolis-area real estate agent who sold this house, says open houses are usually a waste of time in getting a home sold. (Photo courtesy of Angie's List member Becky A. of Brooklyn Park, Minn.)
Open houses play a role in today's real estate market, but not the one most home sellers might assume, say several real estate professionals who are highly rated by Angie’s List members.
“Open houses are typically overrated," says Brett Clifton, a real estate consultant in Seattle. "Most sellers think holding open houses increases the market exposure of their house. The reality, at least in the Seattle market, is that 95 percent of buyers are using a broker. So they can get in every home any day of the week at a time that’s convenient for them. The majority of the prepared marketplace doesn’t need the open house.”
Jen Geisinger, a real estate agent in the Minneapolis area, says she rarely hosts open houses. “It’s a waste of time for the sellers, who have to light candles, bake cookies, take the dog and kids and leave, and then maybe three people come. And usually it’s neighbors who want to see how they decorated," she says. “Most agents won’t tell you that the reason we do open houses is to get clients. Someone will walk in and say, ‘This isn’t what I want.’ The agent will say, ‘Really? What are you looking for?’ Meanwhile, they’ll ignore whoever else is coming through.”
Can be a security risk
Generally agreeing with Geisinger's assessment, Indianapolis agent Mike Puckett adds that open houses create a security risk in an occupied home, with some visitors seeking to steal prescription drugs, jewelry or other items. He will, however, conduct an open house if a client wants one. “I sold 37 houses in 2012 and had eight open houses at the owners’ request," Puckett says. "I didn’t sell anything through the open houses. With the amount of pictures you can take and the virtual tours you can do online, that really does away with the need for open houses."
Clifton says an agent might plan an open house to show he or she is using every tool to sell the house. He warns, however, that sellers should make sure the hosting agent doesn't use the open house to promote other properties. "Sometimes you see a flyer with the subject property on the front, and on the back you’ll see a list and maybe photos of other area homes that are similar and for sale. If that happened with me, I would fire my broker instantly, because that's telling buyers about my competition," Clifton says. "However, I don’t mind if agents give information about sold properties. In that case, they're justifying the price for my property."
Helpful for buyers
A National Association of Realtors survey of 2012 home buyers shows that 45 percent visited an open house, and 10 percent said they first learned about the home they bought through a yard sign or open house, compared to 42 percent of buyers first seeing their chosen home on the Internet. NAR spokesman Walter Molony says that though there isn't a statistic just for open houses, they do have overall value.
"With nearly half of buyers attending an open house, they’re hardly a waste of time," he says. "Buyers educated themselves about the types of homes and price ranges in given neighborhoods, which is very useful in making an offer, even if they don’t buy one of the open houses they attended. Open houses also are attended by real estate agents, giving them first-hand information about properties that may be of interest to their buyer clients."
Clifton agrees that open houses serve a general purpose. “Online tours and open houses are a noncommittal way for tentative buyers to get more serious," he says. "From a market-wide perspective, that’s a help, but it's less so from an individual seller's perspective."
Most useful in a sellers' market
Clifton and other agents say open houses are most effective in markets with low housing inventory and high buyer demand. "In a sellers' marketplace, the open house can play a pivotal role in what’s called a 'delayed offer review,'" Clifton says. "That's when a home is put on the market, with information provided up front that offers will be reviewed on a specific day. Planning an open house in that situation can be effective for creating a competitive environment."
San Francisco is an example of a housing market where open houses have a high profile, say top-rated local real estate agents. “Open houses are very effective in our area,” says Barbara Lymberis. "Homes are pretty much sprinting off the market as soon as we put them on sale. The more folks come through an open house, the more likely it is that an auction mentality will arise that drives up the final price.”
She says it's common to plan four open houses for each listing. "Two per weekend for the first two weekends," Lymberis says. "Sometimes the offers come flooding in after the first weekend, and then we discuss with the seller whether to review offers then and there.”
Overshadowed by other tools
Steve TenBroeck, an agent in Palo Alto, Calif., says open houses in the San Francisco market are effective, but don't eclipse what he considers the top tools for selling a house: "Professional staging, lots of photos on the multiple listing service and a video tour.”
Betsy Ark, an Angie's List member in the Minneapolis area, credits her home with getting an ultimately successful offer in 2.5 weeks because Geisinger, her agent, recommended staging and great photos. Ark says she was initially surprised at Geisinger's low opinion of open houses but ended up glad to forgo packing up a toddler and twin babies and leaving home for several hours at a time. "If we had thought about it more," she says, "we would have realized that although we've attended open houses, we've never been serious about any of the homes we've looked at."