Yes It's Worth Holding an Open House!

By Penny Elizabeth Dutkowski, Broker 

May as well entitle this post with the true answer to the question that brought you here. 

All jokes aside, in the grand scheme of things the answer is mostly yes and sometimes no. Confused yet? don't be I'll explain and even expose quirky twists of statistics often used by some even in my industry, to deny the effectiveness of an open house. Ergo, if you're already in the, 'no they're useless camp',  I bet I would be correct in assuming your reasoning is because you think real estate salespeople use them purely to recruit clients and that they produce less than 5% of all buyers - that is the quirky twist of statistics in play.

A whole lot of people, mostly real estate salespersons, look for justification to not hold open houses or is that to not spend 2 or 3 hours holding them? and, finding affirmation in why someone else says they don't work the word is spread - no verification of facts necessary. It's sort of like the radio ad in Toronto where a radio personality who, albeit paid to do so, speaks for a particular broker who claims open houses are ineffective. He then trumpets an over asking sale price on a recent sale as proof of the salesman's prowess. That public announcement said with such authority can be powerful enough to block out facts if you don't hear the disclaimer of sorts at the end where the radio host distances himself from actual knowledge with, 'if I was selling my house, I'd hire..."

The truth is no open house is needed when anyone in today's seller's market can attract all sorts of buyers even those with high hopes by under-pricing a property by 10-20% and hold off offers to 5 days later. The real news there would be if it didn't sell over list. Yet, it's somewhat true in such an instance you may not want to hold an open house because you're going to have more than just the looky-loos and nosey neighbours, you're going to have those who hope to steal your property at a price they can afford. That still doesn't mean an open house wasn't worth having since here the forced competition breeds the bidding war, but it also raises the debate that with the attention an unrealistically low price will attract, is the open house necessary? 

So then, excuse number 2 for not having an open house is that some stat says that open houses bring less than 5% of all buyers. That stat is supposed to have come from a NAR (National Association of REALTORS®) survey from multiple years now. Rarely is the source ever linked to but every once in a while someone will present a chart directly from NAR as with this one. 

It was recently used in a blog article by an American real estate salesperson who made the claim that since only 8% of all buyers are first introduced to a property by a 'for sale' or open house sign, a 1 in 10 chance of it being bought by an open house buyer is extremely poor odds.

His article which was recently dropped into the feed of a very large Facebook real estate group stirred the debate in there and it was he who made the 1 in 10 statement. On careful inspection though you'll note that the chart is actually noting it's where buyers found the home they purchased, not the percentage of buyers who purchased through an open house. That's a salient point that all before him also misconstrue and misrepresent. They also doesn't account for buyers who were introduced to the property by all the other ways noted and who subsequently first physically attended at the open house and then bought it, which conceivably means a higher percentage and which goes exactly to the point they raised to begin with when talking about open houses. Ironically in debate, the salesman/blog author parroted another claim that buyers would then use a Realtor® to show them the property - a smoke and mirrors tactic to confuse apples with oranges.

When I asked him why we would want to remove a 10% chance from our client and not spend a measly 2-3 hours to do so he answered that some say the number is only 2%. 

"That some say" can hardly be considered proof. 

Even so, spinning it as a 1 in 10 chance sounds so much worse than saying there is a 10% chance an open house will produce the eventual buyer, but more importantly, it's stated that way to cause the reader to agree with his conclusion that they're useless. 

Excuse number 1 is that 'agents' use open houses to collect clients. 

Well, that's most certainly true. I can attest that on most occasions when I've attended an open house the rep is busy collecting from the visitor their email & telephone information; what they're looking for, where, price etc., instead of  giving them information about the property. In that regard then, yes, it's fair to say open houses are ineffective, but it is unfair to not state that open houses would be far more effective if the sales rep/broker actually promoted their clients' best interests as required to do, rather than their own. 

Let's emphasize that again: it is unfair to not state that open houses would be far more effective if the sales rep/broker actually promoted their clients' best interests as required to do, rather than their own. 

And that's why open houses have only a 1-10% effectiveness because of those real estate professionals who don't actually spend the time doing what their seller hired them to do - promote the property rather than them self. Just think how much more effective they'd be. But their For Sale sign with their picture will surely grace the front yard yet that sign has not much more chance of selling the property than an open house nor is the listing rep's face what is being sold - their picture contributes zero, but there it is anyway.

Here's some information that comes from being a member of agent only groups with tens of thousands of agents. Real estate brokers and salespeople are always exploring ways of lead generation. They want to know how to convert customers into clients; what questions to ask and what auto dial and CRM software to buy etc., and to that end there are literally thousands of people making money off the industry for such software or books and seminars on generating leads.

General consensus on industry only sites runs something like this: it takes 3 hours to make 100 calls, of that there may be 20 actual contacts; of that 4 leads and of that 1 client is landed under contract. The highest I've seen claimed was a 20% conversion rate to client but no one believed the claimant and she did not defend her statement. Having spent a lot of hours on the phone as a volunteer drumming up support in Canada's 2015 Federal election for our now Minister of Health, I can say the first set of stats appear correct.

Think about this for a minute - a real estate person will spend money for auto dialing and CRM software and 3 hours on the phone for a 1% return - let's quadruple that to be generous for a 4% return, but they'll find every excuse why 2 hours to give you even the lowest 1% chance to find a buyer is not a good idea.

A previous post on what to look for when hiring a Realtor® suggests attending open houses and watching for what they're promoting - the property or them self and the questions to ask during the interview stage. So let's add this to the interview questions: at the very beginning make small talk, ask how long they've been in business, then ask if the market is such that they have to cold call to get clients. Later on ask for their thoughts on open houses. If they're in the not for crowd but do cold-call or, start citing stats like the above for why they're not a good idea realize that they've arbitrarily reduced your buyer pool by at least 10% and that you might want to wrap up the interview.

     By Penny Elizabeth Dutkowski, Broker 
Loves holding open houses to promote your property
HomeLife/Bayview Realty Inc., Brokerage-Independently Owned 
and Operated. Thornhill, On. (905) -889-2200

All posts are the express opinion of Penny Elizabeth Dutkowski and should not be construed as that of the Brokerage.