The truth is that open houses aren’t the be-all and end-all that many people think. They’re not even the great marketing opportunity for Realtors that is sometimes referenced. They’re helpful, but not for the reasons you think.
In order to understand the benefits of open houses, it’s a good practice to look at the data.
The best source of data on open houses is from the US National Association of Realtors. They research and publish a document called the Home Buyer and Generational Trend report.
Unfortunately, within Canada, the Canadian Real Estate Association does not do similar work. As such, we will use the US data from 2019 as a reasonable proxy for buyer behaviour here in Canada.
When we look at the data on open houses, a few things stand out.
Everyone does it. Well, half of everyone does. Maybe less.
The NAR reports that 52% of homes that were sold with Realtors had open houses. Within Canada, it is likely that number is high, as looking in Toronto at open houses as a percentage of homes on market shows that about 10% of the homes currently for sale are having open houses.
If we assume that not all homes have open houses every weekend and there are likely open houses not officially listed on the Realtor.ca website, we may get closer to that US number of around half of homes sold having open houses.
The truth of the matter is that not all sellers are interested in open houses and not all listing agents want to do them.
Take a look at the photos below. If you are a home seller, you’re probably quite uncomfortable at those many strangers in your home. If you’re a Realtor, you might be pleased at the turn out, but also worried whether you can ensure the condition and safety of the home with such crowds.
Even if both a seller and their Realtor agree open houses make sense, they don’t always happen. When sellers have things on the go and are reluctant to leave for the afternoon on Saturday and Sunday, open houses don’t take place. When Realtors are busy with other clients and can’t find a colleague to host the open house, it doesn’t take place then either.
If about half of homes have open houses in the US, and Toronto is closer to 10% at a given time, it seems reasonable to say that a significant percentage of homes that sell have open houses, but at best it’s half of the properties that sell.
Clearly, some sellers and their agents are not believers in open houses being a critical part of the selling process. Let’s see why they think that’s the case.
Only 2% of buyers find the home they end up buying due to open houses.
The NAR says that for sale signs and open house signs are where 7% of buyers found the house they purchased. Given for sale signs are up 7 days a week and most municipalities in the GTA limit open house signs to within a short time before and after the open house, open house signs likely make up the minority of that 7% of buyers who found their home through signs. Let’s be generous and say that open houses account for, at most, 2% of that 7% stat (with open signs up two days a week as opposed to the 7 days a week that for sale signs are up).
Regardless of the specific percentage, it is clear that open houses are nowhere near the most common method in which buyers find the home they end up purchasing. For reference, being introduced to it by their Realtor and seeing it on MLS constitute the vast majority of ways in which buyers find homes.
Based on this review, it seems clear that not many sellers actually find a buyer via their open houses. So why do they still exist? Some people say that the only real reason Realtors push open houses is because they’re a fantastic opportunity for the listing agent to find additional clients who are looking to buy or even sell their own homes.
Let’s see how the data stacks up on that theory.
About 1 in 20 buyers meet their agent at open houses.
The NAR data on this is a bit surprising. Many agents maintain that open houses are a fantastic opportunity to find eager buyer clients and to even meet neighbours who are impressed with how they are marketing the home who choose to hire the agent to list their home as well.
The statistics show that between 4% to 5% of buyers and sellers find their agent by visiting an open house. That’s not a huge percentage and is dramatically less than the most common ways, which include referral of the agent by a friend or family, used the agent previously, or inquired about a property seen online.
While 4% to 5% may not be a huge percentage of the total, it’s still a significant enough amount that it makes sense for Realtors to host open houses. It may never equal the number of clients a Realtor finds from referrals and repeat business, but it far exceeds the 1% return that most Realtors see on their print marketing material mailed to your home or a local billboard.
If we sum up the three data points we’ve discussed, it seems like open houses really are primarily a benefit for Realtors. Not a huge chance for them to get tons of clients, but a good opportunity to meet interested buyers and potential sellers.
While home sellers who have an open house do have a chance of the eventual buyer coming to them via the open house, it is quite small (2% at most) and definitely not the most productive place to focus if you want to get your home sold.
Before we close the door on the topic, is there any other reason that open houses work? Here’s one.
Open houses can predict what will happen – and what should happen.
Much like the number of showings gives a seller and their agent a good feeling for the level of interest in a property, the attendance at an open house is a strong predictor of what will happen next.
Within Toronto, many listings have a viewing period, where the home is for sale and the seller has asked for offers to be held back to a set date, typically a week or so out. This allows time for interested buyers to see the property and for the listing agent to host open houses on the one weekend before any offers are reviewed.
The attendance at your open house in these cases tells you what comes next. If you’ve got lots of people at your open house, you will likely see lots of offers. If only a few people straggle in, it’s likely you will see few or no buyers on your offer date. This rule of thumb holds true even if a seller isn’t holding back on offers, as many times a buyer will visit during an open house when their Realtor is unavailable and come back after for a 2nd visit and then submit an offer.
Apart from the numbers of visitors who attend on a given day, open house also serve as a great opportunity for the listing agent to ask questions of the potential buyers who come through. While some visitors are polite and don’t say much, there are many people who are happy to tell the agent what they think of the home.
If there are consistent issues raised by a large percentage of the visitors, it gives invaluable feedback to the Realtor and the seller as to what the public thinks of the home. In some cases, the issues can’t be addressed, and it is useful only in that it tells us why we aren’t getting the response we hoped for – but in other cases, it gives the home owner an opportunity to fix a problem.
While open houses may not be the sharpest weapon in a Realtor’s arsenal, there are some benefits to the seller – and their Realtor – to hosting open houses.