Between cleaning, getting the sellers out of the house, breaking out the cheese and crackers and uncorking a bottle of wine, open houses are a burden for you and your sellers. But what if you were to find out it’s not always worth the time, talent and effort?
For most of California, it is. But the truth is, having an open house doesn’t always help you to sell a home more quickly — or for a higher price.
Homes with open houses tend to sell for above the asking price and more quickly in California, according to a report by Redfin, a national real estate brokerage. The report analyzed sales data of homes in markets where Redfin is active going back to 2010.
However, the signals are decidedly mixed. Across California, the difference varies by region. In:
- San Francisco, 74% of homes with open houses sold above asking compared to 47% of those without an open house;
- San Jose, 65% of homes with open houses sold above asking compared to 47% of those without an open house;
- Los Angeles, 36% of homes with open houses sold for above asking compared to 29% of those without an open house;
- Oakland, 65% of homes with open houses sold above asking compared to 49% of those without an open house;
- Sacramento, 13% of homes with open houses sold above asking compared to 12% of homes without an open house; and
- Orange County, 18% of homes sold above asking, the same as without an open house.
On the other hand, homes in Ventura, Riverside and San Diego tend to sell for less when the agent holds an open house.
What accounts for the difference? Some homes simply present better than others in person, or are located in desirable areas with significant foot traffic. Further, take the above Redfin study with a big grain of salt: their data may be skewed by the fact that agents tend to hold open houses only for those homes that are in coveted locations and in prime condition, and therefore already more likely to sell for more and to sell quickly.
In other words, agents are more motivated to host open houses when they have an attractive listing they want to show off. And why not? Open houses are just as much about the agent getting to know the nosy neighbors who stop by as they are about trying to solicit interested homebuyers.
Agents: what do you think? Do open houses help sell your listings for more, or more quickly? Or is it more about mining for future clients? Share your thoughts in the comments below!
Check out first tuesday’s free marketing material on open houses for you to share with potential clients:
FARM: 5 things to ask at an open house
And if you’re viewing open houses with your buyer, use RPI’s Open House Agent Interview Sheet. [See RPI Form 320-2]
This form is used by a buyer or a buyer’s agent when attending an open house and provides a checklist for conducting an interview with the seller’s agent and gathering information about conditions of the property, its financing, the seller and the surrounding area.
The open house is more about eye wash for the sellers , The open house benefits the agent who is looking for buyer contacts who have not been shopping the internet. It is a good training ground for new agents if they have been properly coached in greeting, asking questions and obtaining info from the suspect in order to turn them into a prospect and finally a client.
Viewing houses through photos will still never replace the buyer actually being in the house plus there is a buyer type who must actually touch the property in order to decide to buy it. I remember in 1969 there was a company selling a service of video taping a property and the idea was buyers could sit in the comfort of your office with refreshments and view your offices listings and those of other brokerages who were members. Long story short we thought this could be used as a listing tool as well as with buyers. The very first property we did was a new listing of mine and the day we got the tape a buyer who had sold his two Dallas Texas car dealerships and was buying one in our area of California walked into the office with his wife and announced they wanted to be in a home by the first of the month. We talked and it sounded like my new listing on the video was exactly what the where looking for. showed them the tape and they didn’t like it. I never showed so many properties in my life and on the way back to the office decided to show them the listing they viewed in the office and hated. I showed it and halfway through it they both declared this was the one and snarled you should have shown us this one at the beginning before someone else buys it, there may be an offer being written right now. When we had closed escrow and were leaving the title company I handed them the tape and said remember that first property I showed you a tape of and you hated, well this is the tape, and it is the property you are now the proud owner’s of.
Majority of qualified buyers are working with agents. The issue I have is the start time for this study……2010. The beginning of the housing recovery started in 2010….there for every year home values increased…….if you graph the increase in sales and appreciation from 2010 to 2016 you would have a straight line up…in the bay area were limited space alone limits expansion, but increase value also occurs with limited inventory. We actually had less open houses performed during this time. So I think the “perception” having having an open houses increase value is misguided. People always ask me when will the market change…….one simple answer is when you start seeing more open houses…….today we are beginning to see that……..when that occurs…agents expand their marketing plan, and that may include open houses……sellers have the perception we need to do open houses……..because we do them as agents and they are included in our marketing plan. The key to any marketing plan is executing that plan with a value return….not always easy, but a goal to attain for all parties.
An open house is absolutely about the agent meeting potential buyers and not necessarily about selling the house being held open. I think if most sellers understood this, they would likely prohibit the agent from holding opens. Add to the metric the increasing concerns for safety and security, you can add more reasons for not holding them.
There are a variety of other data that influence the regional differences too, like local custom! In areas like SF, the sale of high end properties is a form of vanity and ego for the sellers so they love to show off the home, especially to the neighbors. Then there is the issue of competition- if your competitor holds his/her listings open, you must also do so otherwise risking the question from your client- “why not?”
Finally, the new(er) generation of buyers have already done their homework, have viewed the listings from the privacy of their desktop computers or smart phone and will only go look at a very, very select few homes and not in the company of a “public open.” As the marketing becomes more sophisticated, with high end photography (perhaps including aerial via drone) and increasingly with VR tech, opens will truly be outdated.
Uh, isn’t meeting potential buyers about selling the house?
I agree Jose. Open House is a vestige of the past. All buyers are doing their homework these days by reviewing new listings on line, and most online listings already come with photos of the property interior. No buyer in his right mind wants to wait for an open house to go for a look. They want to look immediately and write an offer quickly. Waiting until a week from next Sunday for an open house is not getting it done.
An open house is mostly about an Agent meeting potential buyers and expanding their business.