7 Things to Know BEFORE Holding an Open House in Real Estate
1. What is an Open House in Real Estate?
In real estate, an open house is an event where prospective buyers can tour a home that is listed for sale. Open houses are typically held on weekends (as that is when many buyers do not work and have time to tour homes), although they can be held during the week as well. Open houses are usually held by the seller’s listing agent, though successful Real Estate Agents typically have a team of folks and a member of the team usually will offer to hold the home open. The reason for this is it's a great way for the team member to build their book of business by interacting with prospective buyers. They are theoretically using your home as a storefront to grow their business. In the event the seller is not working with an agent, the open house may be held by the seller. Realtors and/or homeowners will typically offer something to entice potential buyers to tour the home such as a giveaway, food, or drinks.
2. Pros and Cons of Open Houses in Real Estate
The pros and cons of open houses in real estate will vary depending on whether you’re a buyer or a seller:
Open House Pros if You’re a Buyer:
- No scheduling appointments necessary
An open house does not require an appointment, so the buyer can simply show up during the open house timeframe and view the home. This is different than a private showing, which involves setting up an actual appointment to tour the home and getting approval from the seller/seller’s agent that the appointment time will work with their schedule.
- Walkthrough the home
It is much easier to determine whether you like a house or not after physically visiting it. Attending an open house provides the opportunity to get a better understanding of bedroom dimensions, floorplan layout, backyard size, and more. We strongly encourage our clients to attend open houses as their buyer's agent and if it's something they are interested in we will schedule a private showing to go through all of the details before submitting an offer.
Open House Cons if You’re a Buyer:
- Open houses can be hectic
When viewing a home, you want to take your time carefully walking through each room, assessing any potential work that needs to be completed, and ensure there is adequate space for your needs. Depending on the home, some open houses can attract many prospective buyers, causing some distractions when trying to tour the home. Giving yourself the time to assess whether or not you want to move forward with a home while surrounded by a sea of competing buyers may make it a challenge to make a clear decision.
- Attending several open houses in a day may cause unnecessary stress
Hopping from one open house to the next can be extremely exhausting, making the house hunting experience far less enjoyable than it should be. It is best to schedule two or three private showings in a row and give yourself ample time to tour each one, rather than running from one open house to the next within a tight timeframe.
Open House Pros if You’re a Seller:
- Increased exposure
Prior to holding an open house, a Realtor typically advertises the open house as much as possible via social media, print/digital ads, street signs, etc. This increases your home’s marketing exposure and helps spread the word about the listing. Open houses can also attract a wide range of buyers, giving your listing more visibility among prospective purchasers. However, it is important to note that this same level of marketing and exposure can be done for the listing even if there isn’t an open house.
Open House Cons if You’re a Seller:
- Open house attendees may not be qualified buyers and are just “browsing”
Anyone can attend an open house – attendees don’t typically need to register or have mortgage pre-approval or prequalification prior to attending. For that reason, many attendees may just be nosy neighbors or individuals who are not very serious about their home search – they are just browsing homes to get a feel for the market.
- Low chance of home selling from an open house
In my experience as a Realtor over the past ____ years here in North Carolina, an extremely low percentage of sales have resulted from an open house. Most of my clients have sold their homes through a private showing. This is primarily because I can check to ensure that the potential buyer has been pre-approved for a mortgage prior to attending a private showing. In doing so, I know that the buyer most likely has the funds available to buy a home, and there is a higher likelihood that they will be approved for a loan. This helps save both the buyer and the seller’s time.
- Worst case scenario: increased risk of security issues and break-ins
Even if you live in an extremely safe neighborhood, vandalization is an unfortunate reality. Open houses provide an opportunity for criminals to enter your home with limited supervision and map out a plan for theft. This is applicable for vacant homes as well, as thieves can steal appliances, copper plumbing, lighting fixtures, and various other items left in the home.
3. Should I Have an Open House When Selling My Home?
Although there are pros and cons to open houses for both buyers and sellers, I typically caution my clients against holding open houses due to the low likelihood that they will procure a buyer. Instead, I prefer to heavily market my client’s listings and hold private showings so that I can ensure the prospective buyer has been pre-approved for a mortgage. After all, you wouldn’t want individuals walking through your home if they can’t afford to buy it, right? Private showings are one of the ways to prevent that.
4. Do Open Houses Sell Homes in 2020?
2020 will continue to bring advances in technology within the real estate sector, making it easier for buyers to shop for homes online. With the rise in virtual reality, high-resolution photography, advanced videography, and interactive floorplans, prospective buyers have fewer reasons to attend an open house than ever before. Knowing that open houses will become even less relevant in this new decade, as buyers will spend more time looking at homes on their smartphone, tablet, or computer in an effort to waste less time attending one open house after another. The new era of millennial buyers will take time to research homes online, viewing the videos, photos, etc., prior to touring the home to ensure they are serious about it. For those reasons, open houses will become less relevant as we strengthen our digital reach in 2020 and beyond.
5. Are Open Houses Worth it for Realtors?
Realtors who prefer to work with buyers may benefit from an open house because it gives them the opportunity to network with buyers who aren’t working with a Realtor. These potential buyers may be early on in their stage of shopping for homes and may not know a thing about the North Carolina Home Buying Process. However, this is not always beneficial to you as the seller. Here’s why: if your Realtor is focused on finding new clients while hosting your open house, they may be distracted and not as focused on speaking with buyers who are actually interested in buying your home. Although this is of course not always the case, it is a possibility that sellers should be aware of when determining whether or not to hold an open house.
6. Are Open Houses Worth it for Sellers?
Open houses may lead to wasted time, energy, and money for sellers. Prior to hosting an open house, you will, of course, want to ensure your home is in tip-top shape. This may mean you will be stuck cleaning your home for hours leading up to the open house or may spend money on a cleaning company to organize your house for you. Of course, cleaning your home is an unavoidable necessity when listing it for sale, as you want to ensure it is always clean and organized for private showings. But how disappointing would it be to spend hours cleaning your home, or spend hundreds of dollars on a cleaning service, only to have one buyer show up to your open house who can’t even afford the home in the first place? It is far better to devote time, energy, and funds to the private showings, as those are the appointments that are more likely to procure a buyer.
To attract buyers to an open house, agents may convince sellers to purchase food, drinks, or entertainment to entice attendees. Although this may help bring in more buyers, this can also bring in individuals who are just looking for a free meal. Although some agents may offer to pay for catering or entertainment, this more commonly comes out of the seller’s pocket and can be a waste of money. In addition to spending much-needed funds on open houses, the seller cannot be home during an open house, meaning you are responsible for getting the kids, pets, and relatives out of the house for several hours on a weekend. Finding an activity for your whole family to do, including pets, for 2 – 3 hours on a Sunday afternoon can pose quite a challenge and will prove particularly frustrating if only one disinterested buyer or a nosy neighbor shows up to the open house (or no one at all).
7. Are Open Houses Safe?
When a seller opens their home to be viewed by the public, there is always a possibility that unsuspected criminals may enter as well. With the prevalence of home security systems and hidden cameras, this is not quite as common as it may have been 10 or 20 years ago, but sellers should still take some precautions when hosting an open house. Here are some tips to help protect against theft when holding an open house:
- Ask neighbors you trust to keep an eye on your home
If you have neighbors you trust, ask them to attend your open house or keep an eye on your home during the time when the open house is scheduled. If they notice any suspicious activity, they can alert you right away.
- Remove all valuables
If you own expensive jewelry, artwork, or other items that can easily be picked up, remove those items from your home altogether, or put them in a safe.
- Have all attendees sign-in
Ask your Realtor to have a registration sheet available and require that all attendees sign-in with their contact information. If you anticipate a large number of attendees at your open house, ask your Realtor to bring a second agent or assistant with them to ensure that no one skips the sign-in process.
Common Questions about Open Houses in Real Estate:
What is the Purpose of an Open House?
The ultimate goal of an open house is to secure a buyer for the home. An open house allows prospective buyers to tour the property at their leisure, either on their own or guided by a Realtor.
Are Open Houses Effective?
Many years ago, before the age of digital technology, buyers had limited ways of seeing a home besides attending an open house or a private showing. Prospective buyers would review ads for homes on the market in the newspaper or drive around on a Sunday afternoon looking for open house signs. However, buyers now have various methods of digitally touring the home, making open houses less effective than they once were. If a buyer is really interested in putting an offer on your home, they will set up a private showing request, which will give them a quiet, non-chaotic environment to carefully walk through the home and make an offer.
How to Prepare for an Open House:
When preparing for an open house, try to eliminate as many personal items as possible. The less cluttered your home is, the more open and spacious it will appear – which is an important factor for most home buyers. If possible, try to put as many items as you can in storage. It is also advised to remove all personal items such as family photos, toiletries, etc. When a prospective buyer walks through a home, they try to envision themselves living in it. Seeing your family photos or personal items throughout the home will make it harder for them to picture the home as their own.
Do You Need a Realtor to Attend an Open House?
If you are selling your house on your own without the help of a Realtor, it is not required to have a Realtor at your open house. If you are selling your home through a Realtor, they will be present during the open house timeframe. In nearly all situations, sellers are not advised to be present during an open house, so you will most likely need to make plans during the time when the open house is scheduled.
If you are a buyer who is working with a Realtor, it is strongly advised to attend the open house with your agent, as they can guide you through the home, answer questions, and assist in drawing up paperwork in the event you choose to make an offer on the home. If you are not working with a Realtor, you can attend the open house on your own – a Realtor is not required.
What Percentage of Open Houses Sell Homes?
There aren’t metrics in place stating what percentage of home sales are directly tied to an open house, but Realtors tend to be somewhat divided on the topic. There are some who believe open houses are effective, while others who believe there are far more effective ways to attract buyers.
Why Do Realtors Have Open Houses?
A Realtor will hold an open house with the ultimate intent of finding a buyer for your home. However, some Realtors may also host open houses to market themselves and their businesses. There is nothing technically wrong with this, as Realtors should actively seek new business, but this may lead the Realtor to be distracted while speaking with prospective new clients and be less focused on the buyers who may want to buy your home. This is certainly not always the case, but open houses do pose the perfect opportunity for Realtors to network with prospective buyers who are not working with a Realtor.
Although an open house certainly will not hurt your chances of selling a home, there are other methods that may prove to be less time consuming and more cost-effective when selling a home. The statistics show holding an open house is unlikely to sell your home. Every market is different, but I have always provided my clients with the pros and cons of holding open houses here in North Carolina, as private showings tend to be a more effective method when procuring ready, willing, and able buyers who have mortgage pre-approval and can afford to buy a home.
Hi there! I'm Ryan Fitzgerald, a REALTOR in Raleigh-Durham, NC and the owner of Raleigh Realty. Chances are you and I share a similar passion, Real Estate! I also have a passion for technology, sports, and people. Would love to hear from you. Drop me a note in the comments section below and feel free to share this article socially!