What Do Open Houses Actually DO?

My seller clients sometime ask me “are open houses worth it?” It’s often said that it doesn’t do much and realtors only hold them because it benefits themselves not their clients. While there is SOME truth to this, I’d like to offer some alternative commentary. I’m a high volume realtor, consistently in the top 1-2% of agents in Austin. Even so, I can only remember ever meeting two families at an open house that I ended up closing homes with. Maybe other agents have more success with them but working open houses over the years I would not exactly classify as effectively “self-serving” as many other activities I could have been doing. Although it doesn’t highly benefit me, I still often recommend doing them. Why? Because of the strategic and psychological advantages it provides to my sellers. I’ll explain.

A home that sells quickly is usually a home that sells for the highest price. Good realtors aren’t just trying to get a home sold quickly so they can line their own pockets. They primary reason to sell quickly is because that’s the window we can get the highest amount for our clients. Since that is the case, we want to try to arrange as many things as we can so it goes under contract during the first weekend. Having an open house advertised automatically creates a little more sense of urgency among buyers. They think “gosh, if I like this home I better act quickly. If I wait until Sunday’s open house then EVERYBODY is going to see it. I need to beat them to the punch! …Plus if I wait, it might be gone after the open house.” Now this is not necessarily psychological manipulation of the buyers. This thinking is actually quite valid at times, in a fast-paced seller market like this. Buyers serve themselves by wasting no time.

Now from a seller agent’s perspective, is it the open house itself that makes the difference, or just the advertising of it? I’m inclined to say it’s the public advertising of it that makes more difference, but any respectable person I think would feel obligated to actually DO the open house that they advertise, so in a sense it doesn’t really matter. The amount of homes that get sold to buyers who would have only viewed it at an open house is probably pretty low, BUT… that also doesn’t mean it’s not worth it. I’ve said before many times, in our brokerage we try to do a LOT of things that make only 1-2% difference on the effective selling of your home. If you do something that makes a difference only 2% of the time, 49 out of 50 of our clients won’t even benefit. If, however, an agent does, say, thirty different “2% better” type actions (as we do) then it DOES end up benefiting MOST of our clients. When you do MANY 1-2% better things, it ends up making a significant difference.

Another thing that open house advertising does is puts the home in front of more people. Good realtors know that email notifications are a big part of the game. Some people will set notifications for only the homes that have open houses, so hosting an open house means you land in more people’s email bins. More exposure, broadly speaking, amounts to less days on market and higher sales price. If your realtor is REALLY good at their craft, they might even post the home first and then post the open house an hour later, so that TWO notification emails hit people’s bins. ?

A final things that open houses are useful for is giving seller’s an opportunity to stall. It’s almost never bad for sellers to delay responding to offers while more people see the home. Open houses give seller’s a reasonable excuse for not responding right away. “We want to honor the open house we’ve posted for Sunday, and the people who have already scheduled to see it during that time.” If you were to instead tell buyers “we don’t want to respond to your list price offer for a couple of days because we’re hoping for a bidding war, and over list price offers” that tends to infuriate them. The open house provides an excuse to say something else, however, while extending time for possibility of a bidding war. This is rough on buyers, of course, but a seller agent is only employed to serve the best interest of the sellers. This is the way the seller agent does their best service to their clients.