Open Houses - One-sided Benefits for Agents

Consider the pros and cons before holding an open house

Couple shaking hands with real estate agent at open house
John Lund/Drew Kelly/Blend Images/Getty Images

I read a real estate article that included an agent poll about open houses. Since these respondents self-selected, I think it is safe to assume that there would be a skewing of data in favor of open houses. Sixty percent of 218 respondents said that open houses are currently part of their marketing strategy. Some other points:

  • Nearly half of those who hold open houses held 10 or more in the last year.
  • Of those who hold open houses, 98.3 percent promote the event online.
  • Of those who do not hold open houses, 84.7 percent said that they weren't worth the time and energy involved.
  • 27.1 percent of those who don't hold open houses expressed concern about safety and liability issues.

Buyers Don't Buy at Open Houses

One broker interviewed in the article stated that a few sellers do not want open houses, but most do because they believe that people often buy homes during an open house. This brings me to my concerns about open houses. I believe they do little to sell property in many cases. Every year the NAR survey of homebuyers and sellers reflects this reality. 

More than half of real estate agents who do hold open houses say that one reason is to generate a buzz or exposure for their listing. Sorry, but I'm lost there. What is a "buzz" if it doesn't do anything to sell the home? If I were an advertising salesperson, let's say radio, and I was trying to get a pizza shop owner to let me do a "remote" at their location, they certainly wouldn't pay the price if they knew that only one in 100 people would buy a pizza.

It's just not good business.

Inconvenience to Homeowners

Yet, we keep letting sellers believe that open houses are effective, making them clean the place up, bake cookies, maybe even leave during the opening hours. If we know that it isn't going to result in a buyer for that home, what's the open house's purpose.

 54.6 percent of those who hold open houses said they do it to prospect for clients they can represent in other transactions.

Even sadder, 54.7 percent said that they hold open houses "to demonstrate to the client that I am working to sell their home." Real estate agents should instead tell sellers at the first listing appointment that open houses don't sell homes.

One Attorney's Perspective

Doug Miller, a Minnesota based attorney specializing in real property law and the executive director of CAARE, Consumer Advocates in American Real Estate, is advising buyers to "just say no" to open houses. From the article: "Open houses do not help sellers sell homes, and they certainly do not help buyers buy homes," Miller said in a post on the group's website. "In fact, open houses are not only bad for consumers, they are downright dangerous." His reasoning points:

  • Open houses don't help sellers sell homes, nor do they help buyers to buy them.
  • Buyers may lose their right to be represented by their own agent if they walk into an open house and agree to be represented by the listing agent.
  • The potential for commission disputes increases because a listing broker may refuse to split the commission with a buyer's broker brought into the transaction later on.

    Client Representation and Commission Concerns

    I agree with Mr. Miller. I've had my own experiences with listing agents who pull out the "procuring cause" card. In one case, the agent was contacted by an unknowing property shopper in our area who asked if the agent could fax them the survey plat and restrictions for the property. Many buyers do this because they believe it's the most direct and fastest way to get information. A month later, hiring me as a buyer's agent and seeing dozens of properties, we wrote up an offer. In came the email from this agent's broker claiming the entire commission as "procuring cause."

    My response: This buyer had asked for property details from several listing agents before contacting me and making a buying trip to our market. The buyer, like many others, simply took a direct route calling a phone number in an online listing to get some information.

    It's unfortunate that things like this happen, as it's clear that the other agent could care less what the buyer wanted as a customer or needed in the way of representation. 

    Takeaways

    Open houses still have their place, mostly because they are places where we as agents and brokers find opportunities. They aren't good for sellers or buyers in most cases. If you've sold a home to someone who first saw it at an open house, good for you. But, it is a rare thing.