Is An Open House Worth It?

You spend the days before cleaning, tidying, and trying to keep the house as inviting as you can. Then, you and the family have to hand the keys over to your real estate agent, vacate the premises for most of the date and try not to think about the herds of strangers traipsing through your home. It’s an incredibly stressful event, so, is an open house worth it?

An open house is always worth it for the hosting real estate agent. By opening your home to anyone who wants to take a look, the agent is also hosting themselves an excellent networking event. However, as a seller, you are unlikely to benefit in any way that makes the preparation worthwhile. 

So, why are open houses still “a thing?” Why do some real estate agents host open houses for every single listing while others refuse to hold them at all? And are there ever any benefits to holding an open house?

Why Do People Hold Open Houses? 

At one time, before the internet, open houses were a reasonably effective marketing tool. Serious house hunters would travel around their target neighborhoods and plan their weekend according to which open houses they would like to attend.

Meanwhile, real estate agents were able to answer questions and provide additional information to multiple prospective buyers, as well as sharing the details of any other homes which might be suitable for the house hunter.

This was one of the most efficient ways for buyers to see various homes over the weekend and to engage with other agents who may be able to help find them a home. Sellers would have their home marketed to potential buyers who would not have received the listing details. 

It was a win-win-win for seller, buyer, and agent.

The desire of some sellers and real estate agents to hold open houses today is something of a hangover from this era. Spending a Sunday afternoon hosting an open house is unlikely to be an effective use of either the real estate agent’s or the seller’s time.

What Happens At An Open House?

There are no cut and dry rules for what does or does not happen at an open house.

To begin with, the agent in attendance is not necessarily the listing agent. Why? Because if a buyer does materialize at the open house, it may be illegal or unethical for the seller’s agent to represent both sides of the transaction – a situation called dual agency. For this reason, sellers agents often have a colleague or a junior agent host the open house. Then, if the buyers in attendance make an offer, the colleague in attendance can represent them.

Whoever the agent is, some stay outside and let viewers wander around unattended. Others greet the potential buyers at the door and personally guide them around the home. Most real estate agents are somewhere in the middle. These agents usually greet people at the door, have them sign in, provide any brochures and other information about the home, and invite the visitor to show themselves around.

Who Attends An Open House?

Unfortunately for sellers, the bulk of visitors to an open house is made up of three groups:

  • Neighbors – Although people hate to admit it, we are all a little nosey about other people’s homes. If we weren’t channels like HGTV would not exist. The chance to walk around “that home down the block with the fancy-looking addition” is too much for some people, which is why so many neighbors attend open houses
  • “Lookie Loos” – Slightly different from the neighbors, Lookie Loos enjoy touring the homes of other people so much, they have turned it into a pass-time. Some stick close to home and become familiar faces to the local area real estate agents. Others enjoy a little travel with their home viewing and plan day-long trips to visit open houses near and far.
  • Criminals – Depending on the particular lawbreaker, criminals may attend an open house to steal while they are there or to “case the joint” for a possible later burglary. When people move into a new home, they often buy new items to go into it. Burglars may rob a house that is for sale and come back again to burgle the new owners.

In addition to these three groups, you may get the odd random person who drops in, but these days, few serious buyers attend open houses. Those that do tend to fall into one of these groups:

    1. Buyers who have chosen not to work with a real estate agent. These people search the homes for sale listings themselves and may prefer to attend an open house than to contact the seller’s agent and arrange a private viewing.
    2. Buyers that have happened across the open house by accident. Some serious buyers may spontaneously drop into an open house they have come across while they are out and about. This group usually fall into the “curious if it might be suitable” category. They haven’t previously seen the home because it doesn’t meet their wish-list requirements, but they are wondering if this house might be suitable anyway.
    3. Serious but not quite ready buyers. These open house visitors may be almost ready to begin their serious home search, but they are not quite there yet. Instead, they have decided to buy a new home, but they’re unsure of what they want. As a result, they are attending open houses to get an idea of what they can afford and what they do and do not like.

According to the National Association of Realtors, less than 4% of buyers who are actively looking for a new home, attend open houses. Also, only 2-3% of those buyers made an offer on the house they were viewing.

Why Are Open Houses Less Successful Today?

With the high proportion of “non-buyers” attending an open house, it is highly unlikely that you will sell your home as the result of holding one.

The reasons for this are simple. 

The Internet

While it is the job of the buyer’s agent to source potential homes for viewing, in a recent survey, 88% of homeowners said they had first seen the home they eventually purchased on the internet. Buyers today tend to trawl through the listings on multiple real estate websites, make a list of those they would like to see, and ask their agent to arrange viewings.

Nobody wants to drag there house hunting on for any longer than they have to, so buyers usually try to set up a time to visit asap. In addition, in a hot, seller’s market, it’s essential to get to the home and, if appropriate, make an offer before anyone else can.

Buyers Agents

When a buyer signs up with an agent,  the agent will round up all of the listings they are aware of which meet the buyer’s criteria, and often a few others that the agent thinks might fit. The agent shares the listings with the buyer and then arranges viewings for those the buyer wishes to see.

Once the homes which are currently on the market have been exhausted, the agent will alert the buyers to every suitable new listing as soon as it goes live and, if appropriate, arrange a private viewing.

This system means that by the time an open house is held, the serious potential buyers will have already been round for a viewing.

Why Do Some Agents Insist On open Houses?

Even real estate agents will admit that nowadays, for the most part, there are only three reasons they hold an open house.

  1. To share the listing with other brokers and agents. A “brokers open house” is an open house held by the seller’s agent so other agents in the area can see the home and, if appropriate, recommend the property to their clients. It also serves as a bit of a mini networking event where area real estate agents can swap info and get up to date with what’s what in the local market.
  2. The seller insists on an open house. Some sellers still believe you have to hold an open house to sell your home. The agents representing these buyers may try their best to avoid it, but in the end, if the seller pushes for an open house, the agent will usually have to relent and host one.
  3. To market themselves. Yes, the primary reason for open houses these days, and many agents admit this, is for agents to meet potential clients. Neighbors and lookie-loos who are uninterested in this home may want to sell their home at some point in the future, and if they have met a friendly real estate agent at an open house – who do you think will come to mind first when that person IS ready to move home?

The Other Reason Why Open Houses Are Not Worth It

Last but by no means least, there is the issue of buyer qualifications. No, I’m not talking education here! What I am talking about is the fact that you have no way of knowing if a buyer at an open house is qualified to buy the home.

It’s like this.

These days the majority of real estate agents representing buyers recommend their clients contact their lender and obtain a pre-approval or pre-qualification. Now, although this does not guarantee the buyer will be able to get a mortgage for a specific amount, it does let everyone involved that, in principle, the buyer will be able to borrow X amount. This prevents the real estate agent showing homes their client is unable to afford.

Now imagine you’re at an open house, and one of the attendees makes an offer. You take the home off of the market and begin the sale process. After a couple of weeks, your buyer comes back to say they cannot get a mortgage, and you discover there was never any hope they would have been able to afford to buy your home. Now you have to put your home back on the market. In the meantime, any other potential buyers may have purchased other homes leaving you high and dry.

Final Thoughts

Open houses were once an essential part of marketing and selling a home. Today the way we buy homes is very different and as such open houses are far less relevant. You might even be able to argue that an open house is really only of benefit to the seller’s agent, nosey neighbors, lookie-loos out for an afternoon of home viewing, and criminals who are looking for their next victim.

For all of the work, stress, and worry it takes to get your home ready for an open house, plus the hassle of keeping the kids and pets out of the home while it’s happening, an open house is just not worth it.

Helpful Articles From Real Estate Experts

Do Open Houses Work? – Bill Gassett

Pros And Cons Of Open Houses – Michelle Gibson

Buying Your Home In A Rising Market – Glenn Shelhamer

Open Houses – Power Tool Or Outdated – David Martin

About The Author

Geoff Southworth is the creator of RealEstateInfoGuide.com, the site that helps new homeowners, investors, and homeowners-to-be successfully navigate the complex world of property ownership. Geoff is a real estate investor of 8 years has had experience as a manager of a debt-free, private real estate equity fund, as well as a Registered Nurse in Emergency Trauma and Cardiac Cath Lab Care. As a result, he has developed a unique “people first, business second” approach to real estate.

Check out the Full Author Biography here.

 

This article has been reviewed by our editorial board and has been approved for publication in accordance with our editorial policy.

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