For anyone who has sold a home through traditional real estate means, i.e. hiring a Realtor, you have likely dealt with the inconveniences of the whole process. You have made sure to clean up in the mornings, left personal belongings in a safe place, left the house at the drop of a hat, and made sure to make plans for the expected Sunday Open House that was pushed by your Realtor.
What is an open house and what does it do?
There are two types of open houses, broker open houses, and public open houses.
Broker Open Houses are used to showcase a listing to other Realtors. If another Realtor has a client looking in your price point, this is a valuable way for them to see the home without having to drag the client there, also known as a 'preview'.
Public Open Houses, the topic of this post, are intended to showcase the listing to the public. This might include neighbors, buyers, or just someone that was driving by and noticed the open house sign.
Do Public Open Houses Sell the Listing?
Ask the National Association of Realtors, which reported that, in 2014, only 9% of buyers found the home they eventually purchased at an open house. That’s down from 16% in 2004. To put that in perspective, if your home is a hotly desired listing, and you have, say 10 people come through the home for the open house (which is a LOT), that means that there is a chance that 1 of those buyers actually purchases the home. Again, the assumption here is that 10 visit.
Now, let me be clear, this blog post is not intended to stop homeowners from giving the keys to a Realtor to host an open house. Clearly there is some value, albeit a small amount.
So, what's your point?
Let's back up: When you first list your home, immediately it is marketed all over the place, ideally creating some level of Organic Growth. This immediate pop of activity quickly subsides, say about two weeks later. The real benefit to hosting this open house, and hopefully strategically scheduling it so it isn't immediate, is to reinvigorate the activity on the Internet for buyers who are seeking something similar to your listing/home.
The case I am making here is simple, let your Realtor host an open house, but make sure it coincides with something substantial, such as a new listing, or a price reduction.
How do I get the most out of the open house?
Depending on your local laws, some of these strategies might help get MORE out of the open house (and set you up to counter your real estate agent when they request hosting an open house).
It goes to show that there is always some way to help generate more buzz for anything a Realtor does. If leveraging multiple marketing strategies for your home, the open houses can have a more desirable effect on their listings.
Why does my Realtor want to continue doing these open houses then?
Realtors use open houses as a tool to acquire new buyers and new business. There are a few reasons why doing an open house is a good idea for a Realtor. It shows they are busy. They can pick up new clients. They can further market themselves through their town, through signage.
Realtors thrive when their face is continually in the public. This tends to lead to an insistence to host an open house for every listing, sometimes as often as every two weeks. This frequency can be beneficial once the additional marketing is considered, but only if it is done the right way.
Ultimately, as the homeowner, you decide who shows your house, and when. If you aren't home on Sundays, and an open house is not an inconvenience, then let the Realtor host it. But make sure they implement some supplemental marketing in order to increase the efficacy of the open house. Otherwise, you leave the house for nothing.
I may get some backlash for the secrets I will be uncovering about the real estate business, but I think full-disclosure is warranted in a business that is shrouded by misconceptions, many of which may be intentional. Here are some statements you might hear from your Realtor and the things you should look for:
"Your home isn't selling, we have to reduce the price"
This might be true in some cases, but how can a seller understand why a price reduction is requested? In 9 out of 10 cases when this happens, the seller just hears the words, "We need a price reduction." Instead, imagine if the seller heard, "We need a price reduction, here are the numbers and feedback, all in one place." All of a sudden, this request becomes more manageable and understandable.
"I cannot price your home at the price you want"
The Realtor may not want to sell the home at your price, but they can do anything you want. Taking a straightforward and open approach avoids running into a lie. Just tell the truth people! Try this instead, "I understand you want this higher price, but I do not take listings that are overpriced. I would rather disappoint you now, than in 6 months."
"Zillow and Trulia are the best places to find real estate"
A lazy Realtor will say this. There are better tools out there to seek real estate, and the MLS is only the beginning. You Realtor should have other ways to find you homes to look at, otherwise they are neglecting a part of the market where opportunity abounds.
"I cannot take a cut on commission"
This is typically a false statement. There may be restrictions because of the company, but if a manager is going to lose a listing because of a lower commission, they will accept it. This does not address the fact that a Realtor willing to take a lower commission will likely put a fraction of the effort required because the payout decreases, and with it the tools and money spent decreases, but that is another topic.
"I cannot spend money on marketing on the internet"
Having the know-how to market listings effectively is something lost by many Realtors. Instead, they opt to say they cannot, when really they mean to say they don't know how. Marketing through the Internet is a skill that is honed by few, but those that can use their money to effectively target buyers will get ahead of the pack, quickly.
"Listing your home in the newspaper and through direct mail will get it sold"
Physical advertising is dead. Newspaper and direct mail advertising are for the benefit of the Realtor, not the seller, in most cases. According to NAR, in 2014 92% of buyers used the internet in some way in their home search process. The Internet is IN.
"Open houses are for the benefit of the homeowner and getting the home sold"
A minute percentage of buyers purchase the home they see at an open house (According to NAR, in 2014 only 9% of buyers found the home at an open house that they purchased). Most buyers prefer to search the internet and see inventory with their Realtor. The open house is a branding tool for Realtors and to recruit clients. However, there ARE benefits to an open house for the seller, though they are not discussed often enough. When a Realtor markets the open house, if they are doing it right, they should be promoting the open house in ways that they might only be able to do for an open house, such as an Open House Promotion. This is where the seller sees benefit, specifically through these additional promotional means.
"I can only show you homes within X miles of my office"
Real estate has become a much less location-restricted business. Realtors can now sell and buy across town, county, and state lines. If you get this line from Realtors, they are being deceptive. The better way to convey this, is, "I can only show you homes within X miles of my office because my knowledge of that area is minimal. You would be better served using a Realtor with expertise in that location."
"I can take the photos that are better than a photographer"
A photographer should always be able to take better pictures than a Realtor, but that's not to say a Realtor can't take great pictures. Basically, they want to spend as little money as possible, and this would add to the expenses. As a seller, I would ask if the Realtor uses a DSLR camera with a wide-angle lens, and if they touch up the photos before putting them on the Internet. If they cannot do these things, demand a photographer.
"I am marketing the home on Zillow/Trulia/Realtor/major brokerage sites"
Inherently, when a home is put into MLS, your home will most likely be put on these major websites, no matter what. A decent Realtor should go far beyond these means of marketing. Ask questions about which other websites they are promoting your property to.
Assisting buyers and sellers in real estate is not easy. According to the National Association of Realtors, there are 1.167 million Realtors, or about 1 Realtor for every 300 people in the country. That is a LOT of Realtors. 80% of the Realtors get into the business thinking it is easy, unaware that there is a huge amount of necessary skill to be successful. If your Realtor says any of these things, find someone else. After all, there are so many Realtors, you should have no issues finding one!
As a Realtor, listing real estate is the ideal way to earn your money in this business. With this, understanding what real estate defects that could be hidden is essential for your listings. As a seller, understanding every aspect of the process employed by your hired Realtor is essential, and being able to give educated input is also important. More importantly, knowing what other Realtors hide and what should be made public and clear is also important. In essence, the more information that is given to the buyer, the more qualified, interested, and market-educated they will be when entering the home.
What Information Do You Give?
Most real estate law says that hiding material defects is illegal. This is not something we suggest, nor would be able to be fixed inexpensively if issues arise - make sure to disclose those things. Also, if it can be found online (i.e. public records), there is no reason to make it clear to a buyer, with the location or proximity to an obsolescence being a perfect example. If a buyer/agent does his/her due diligence before looking at a property, this is something that will be found with today's technology before showing the property.
What Information Do Other Real Estate Agents Hide?
Every property on the market is unique. Sometimes agents go out of their way to hide important aspects of a home, thinking they are negative. Let the buyer make that determination, it is not your job to make assumptions on their behalf. Here are five features that are more realistic to be hidden by agents:
Small bedroom - I have sold homes that have the 3rd or 4th bedroom that is so small there is no closet and a twin bed does not fit.
Large, square living rooms - A buyer is searching specifically for a home that has a large square living room (or any room size really). Imagine if their agent were able to actually know the dimensions of every living room and save the time it takes bringing to a home with a living room described as 'large' in the property description.
Fix: Give room dimensions
Is the solution to a home with poor condition to avoid putting pictures of the interior? Absolutely not. Some buyers are looking for something in poor condition. Some buyers want a move-in condition home. If the kitchen is in poor condition but the rest of the home in great condition, and you refrain from putting the picture of the kitchen, you risk bringing buyers in looking for move-in condition by not being forward about it. In most cases, your best bet is to put all the pictures up, just make them look great.
Fix: Put a picture of each main room wherever you market the property
Quality of Materials
Some multiple listing services allow the listing agent to include details about materials used in each room. Use this feature, because if pictures show quality looking hardwood floors, but they end up being a laminate alternative, that might negatively surprise a visiting buyer. If they know what kind of floors there are before going there, they won't have expectation for the wrong material.
Fix: Include lots of details if possible
Sometimes the layout of a home is incredibly unique. Unique could be a good thing, but sometimes is bad. Floor plans solve this problem very well, so consider investing in software or a service that helps make this happen. A perfect example is this App.
Fix: Give room levels, and/or include floor plans
Parking is uncovered
Most MLS services will give you the option of describing what type of parking is included with the home or property, and the number of spaces. Just giving the number of spaces is not enough, especially if a buyer wants covered parking, or a garage that is attached as opposed to detached.
Fix: If the field has specific options, use it; e.g. parking type and not just quantity of spaces
The bottom line: Don't make the choice for buyers; give them the information so they are more educated about your listing than not (within reason).
Read more about the Listing Process.
We (Joe and Chris Balestriere) are Realtors in Fairfield County, Connecticut. Our blog is meant to educate buyers and sellers and equip them with tools to get the most out of their Realtor, whether it is us or someone else. We focus on technology and how it enhances the work we do for our clients--we are not top CT Realtors by accident.