Monday, September 10, 2007

O is for Open House

There are two kinds of Open House events. One is for agents, and the other is for buyers.

The agent open house, which might also be referred to as a broker caravan, or simply caravan, is the more important of the two. It allows agents that work in the area to visit the house and see for themselves the condition of the property, and also see if it may meet the needs of any of their clients. One of the problems I have seen, especially as we have moved into a buyer's market, is the incentivization of the agent open house. I get emails almost every day touting drawings, grab bags and gas cards. "Prizes" range anywhere from a $10 gas card to a cruise.

From the perspective of a seller's agent, I would counsel a seller to consider not only having an agent open house, but also making sure there is some type of incentive to get agents out on a Tuesday or Wednesday (the common days for the caravan) and into the house.

From the perspective of an opinionated person, I think it is pretty sad that we have to offer prizes to get agents out to see the available properties and to help them better serve their clients.

Buyer open houses, which are the first ones most sellers think of, are actually less helpful for the seller. Having sat through my share of open house events, I will be glad to volunteer that the primary reason agents hold these events is to meet others and give out their card. I'm sure that there is an occasional sale that can be attributed to an open house, but the attendees generally fall into one of these categories:

  • The neighbor. Here is our most popular visitor. They have seen the house, and been curious what it looked like on the inside, or what changes the seller might have made since the last time they were able to get in.
  • The passer-by. It's a nice Sunday afternoon, and they are out for a ride... why not? There might be cookies.
  • The semi-pro open house visitor. There BETTER be cookies or something. These folks just like to visit houses and see what they have to offer (cookies, bottles of water, cake, hot dogs, etc.)
  • The dreamer. They might actually be in the market for a new home... but there is NO way they can buy this one.
  • The actual possible buyer. Yep, they are hiding in this group. They are looking for a house in this area and price range. They may or may not have an agent (if they are seriously looking, they have an agent, and will find the house regardless of the open house), but were in the area, and thought they might like to get in for a quick look.
  • The ne'er do well. I have to include this person, too. They are rare, but they are out there. Their goal visiting the property is to see if they can steal something now or later.

The dirty little secret is that there are two reasons agents agree to do buyer open houses. The first is because sellers demand it, thinking it will help sell their house. The second is that there ARE buyers to be had, just probably not for the house. To give you an idea about how slim the chances are in finding a real buyer, many agents actually "loan" out their open houses to new agents to allow them to build a database. You can bet if the agent doing the "loaning" thought there was real value in that database, they wouldn't be so eager to give it away.

In a seller's market, the landscape changes dramatically, and open houses are much more viable marketing. Right now, the best marketing is to have a house that shows well and is priced right. Make sure that area agents know about it, and make sure that the house is convenient for them to bring clients to visit.

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