Do open houses really help sell homes?

Posted: June 1, 2017 at 5:26 am

Do open houses really help sell homes?

The short asnwer is “probably not” if we only gather opinion and anecdotal experience of home buyers and even Realtors. The prevailing belief among real estate agents is that open houses only sell about 1% of listings. However, they’re great as lead generation tools, especially for young or new Realtors (with a light database but a lot of time to put in) or established agents with many listings (who can use them as a marketing machine to get more buyers.)

There is also a common perception among Realtors and sellers that open house are a lot of time and work, inconvenience, and even pose a security concern – all for very little benefit to the actual home sale.

Incredibly, when agents were asked if open houses should be outright eliminated in a recent national survey, 60% agreed that open houses should be a thing of the past!

However, if we look closer at the statistics and data on open houses, we might glean some cautious optimism about the role they can play in getting a “SOLD” sign put up in the front yard.

Consider these statistics on open houses and home sales:

Open houses do help sell homes, but they certainly aren’t a significant – or necessary – factor.

That’s the conclusion of a 2016 National Association of Realtors profile on home buyers and sellers.

NAR polled Realtors (on behalf of their clients) and buyers to find out where they found the home they ended up purchasing:

  • Internet: 51%
  • Real estate agent: 34%
  • Yard sign/open house sign: 8%
  • Friend, relative or neighbor: 4%
  • Home builder or their agent: 2%
  • Directly from sellers/Knew the sellers: 1%
  • Print newspaper advertisement: 1%

So according to this one survey, a little more than half of all homes sales come from a strong internet presence, and between real estate agents working with their clients and the internet, that number jumps to 8.5 of every 10 buyers.

But yard signs and open houses do make up about 1/12 of all buying activity.

In the past, open houses were indispensable for buyers and sellers. In fact, as recently at 2010, 92% of buyers found open houses useful to their home search, according to national surveys. 

According to data from the National Association of Realtors, only 9% of buyers found the home they purchased at an open house in 2014, which is 16% less than a decade earlier.

The number of home shoppers that include open houses in their search process has declined over time, too. In fact, 44% of homebuyers visited open houses in 2014, which is down a significant 51% from a decade earlier.

But in today’s fast-paced, ever-evolving technological landscape, the three years that passed since 2014 might as well have been decades.

So checking more recent surveys by the National Association of Realtors, we find that 41% of today’s homebuyers attend open houses but only 5% actually purchase a home they visited during an open house.

But while some real estate agents consider open houses a waste of time and resources, buyers still don’t seem ready to retire them completely. NAR’s 2015 Profile of Home Buyers and Sellers revealed that 92% of buyers said that open houses were at least “somewhat useful,” with only 8% reporting that they weren’t useful at all.

That same year, the NAR found that 48% of all buyers used an open house as a source in their home search process.

Of course, there are geographical and regional differences to consider when gauging the effectiveness of open houses, too. In fact, when a prominent real estate listing website tapped their data, they found that in some high-cost and fast-moving markets, open houses really do sell a lot of home.

In San Francisco, for instance, a jaw-dropping 83% of listings had at least one open house. In fact, open houses are such an established part of the buyer expectation in the Bay Area that homes that don’t have an open house sell at a 7% lower rate any given weekend!

On the other end of the spectrum, in the Phoenix and Las Vegas markets, less than 5% of listings even bothered with open houses. But for the rest of the country, 20-65% of listings had open houses, including:

83% San Francisco

63% Boston

53% Seattle

44% DC/Fairfax

41% New York

32% Portland

29% Los Angeles

22% Chicago

21% Austin

5% Phoenix

3% Las Vegas

Do open houses have an impact on sales prices? That’s hard to say, and probably beyond the scope of this data. But there is evidence that open houses help homes sell faster (and we know that time is money in real estate sales!).

In fact, in the San Francisco market, 70.7% of homes that held an open house sold within 90 days, compared to only 63.6% of homes that weren’t held open at least once. 

There also seems to be an expiration date on open houses, with research pointing to the fact that they’re far more effective when conducted immediately with new listings.

In fact, when a new listing has an open house in the first week, it’s 13% more likely to sell compared to new listings that don’t have one.

Additionally, a home or listing is 26% more likely to sell if the open house is held during the first week than if it is held open but in later weeks.

Across all markets, 55.5% of listings that sold within 90 days held an open house week one; 29.4% that sold within three months held an open house after week one, and 42.5% held no open house.

***

As we mentioned, the causes and motivations that lead homebuyers to sign a purchase offer on the dotted line are complex – and often interrelated. Certainly, there seems to be some utility to open houses, especially in specific markets.

So in part two of this blog, we’ll explore 10 ways to get the most out of your open houses above and beyond attracting the home’s buyer.

 

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