Almost every time I have spoken with homeowners about ways to market their house for sale, I have been asked if I do open houses to find buyers. My answer to that question is “very rarely”.
At that point, many sellers seem shocked and surprised. Maybe it is from watching real estate “reality” shows on TV, but there seems to be a belief that filling the house with the smell of freshly baked cookies and potpourri, and putting out an open house sign draws in hordes of qualified buyers and inevitably results in getting an offer at the end of the day.
Despite what you may see on reality TV, it is not the reality I have experienced. Here is why I do not include open houses in my usual list of marketing tasks:
1. For the most part, open houses don’t draw in actual buyers. They draw in curious neighbors and people who happen to be passing by and see the open house sign. Think about the times that you have seen a neighbor’s house being held open. When you stop and go in, chances are you are doing so because you are curious to see how their house compares to yours and what they are asking for it. Most neighbors are not actually looking to buy their neighbor’s house. With only 7% of homebuyers buying a home that they first saw at an open house, it is not the most effective way to market the home. It’s like fishing in a pond with 100 fish in it, but only 7 of them are hungry enough to bite. And you only have 2-3 hours (the average length of an open house) to find those 7 hungry fish… what are the odds?
2. A recent survey of homebuyers by the National Association of Realtors shows that roughly 90% of homes are purchased by buyers using a real estate brokers. Real Estate brokers generally set private showing appointments for their buyers, at times that are convenient to the buyer. Using a Broker is much faster and more efficient than driving neighborhoods on the weekends looking for open houses.
3. When you open your house to anyone passing by, you don’t really know who is coming into your home or why they are there! Sure, there may be a sign-in sheet, but many people will not sign in and when they do, they give fictitious information because they don’t want the broker contacting them afterward. When a real estate broker shows your home, most of the time (depending on the broker) they have pre-screened the potential buyer. Most brokers will require the buyer be pre-approved with a lender prior to showing them homes. The lender’s preapproval would include: pulling the buyer’s credit report (which requires a social security number), and getting a copy of the buyer’s driver license, tax returns, paystubs, bank statements, etc. The preapproval process helps verify that the buyer is who they say they are. The fact that the buyer has gone through the application process shows that they are serious buyers and not just “looking”.
4. Open houses can present a risk to the seller’s property. Below is a recent notice (April 2015) to real estate brokers that I found on the IRES website (IRES is one of the MLS’s that serves the Denver metro and Northern Colorado areas).
“Crime Alert from the Colorado Real Estate Commission – Denver police report burglaries of listed homes after holding an open house
The Division of Real Estate has been made aware of criminal activities taking place at open houses listed for sale. The Denver Police Department has received reports of homes listed for sale being burglarized over the last couple of weeks. All the homes involved had held an open house and were later burglarized. Thieves are attending the open house during the day and scouting out ways to gain access; later returning and burglarizing the home. This is an important reminder to take extra precautions with homes you are listing and opening up to the public. Law enforcement recommends developing a good process for checking and ensuring all access points to the home are secured. Denver Police are urging everyone to be on the lookout for anything that seems suspicious at homes listed for sale. If you see suspicious activity or a home that looks like it may have been burglarized, please contact your local Police Department through its non-emergency number.”
5. Open House can be dangerous for the person holding the open house (the homeowner or their broker). I am sure your mother told you when you were a child to never get in the car with a stranger. The same principle applies when being alone in a house with a stranger. Always know who you are dealing with and whether they are a serious, pre-approved buyer. Your goal is to sell your house, but not at the risk of your life and safety. I don’t mean to be a fear-monger, but if you are too trusting or allow yourself to be alone in a house with an un-screened “buyer”, the result could be hazardous to your health and even fatal. Here are some very real stories in the news in the past few years that illustrate the point:
You can search the internet and find many more horrifying tales of attacks on people trying to sell real estate. So- to go back to the question posed in the title of this post- in my opinion, given the low probability (7%) of actually finding your buyer through the open house, and the risks to personal safety and property, I would say that the benefit does not out weight the risk.
If, after reading all of this, you still want to bake cookies and breakout the potpourri , please check out these safety tips for holding an open house, from the National Association of Realtors ( http://realtormag.realtor.org/sales-and-marketing/handouts-for-customers/for-sellers/open-house-safety-tips). If you are interested in selling your home and would like the professional assistance of a real estate broker, I would be happy to help! Please contact me using the form below.