Realtor Open Houses Don’t Sell Houses
The Detailed Version
Realtors have known for years that open houses are a waste of time for sellers, a trap for buyers and sellers, and that they only serve to benefit Realtors by providing them with new buyer clients and listing opportunities1. In a survey of some of the top Realtors2, most of them agreed that open houses did NOT help sell the home that was being showcased. And most of them agreed that open houses helped them generate new listing contracts and that most people attending open houses aren’t even serious buyers. They rated the MLS and yard signs as the most effective marketing techniques and put open houses at the bottom of the list. Yet 97% of those same top Realtors were using open houses regularly! Open houses are a marketing opportunity for Realtors, not home owners.We think it is an exploitive abuse of their clients’ trust to persuade sellers to clean up and vacate their homes so that their Realtors can use them to market themselves to people who have no interest in buying their clients’ houses. We also believe that it is both physically and financially dangerous to use this technique.
First, open houses are a terrible security risk to sellers’ homes and Realtors (do you really want your Realtor sitting in your house all alone while inviting strangers to come visit through newspaper advertisements?). If someone were intent on burglarizing or robbing your home what better way than an open house to case the prospective burglary job and possibly find out when you are going to be away. A savvy thief posing as an interested buyer might be able to get a lot of information out of your Realtor. Or in the alternative, some thieves just go to busy open houses and steal during their visit. There’s not much you can do to stop a thief from going through your closet when you’re practically inviting them to do just that. Is it really worth the risk? We don’t think so.
But that’s not the worst of it. A successful open house is also the creation of a dual agency (an impossible and damaging conflict of interest). Dual agency is possibly the worst violation of loyalty to which an agent can subject their client. Dual agency is where the agent must suddenly and with little warning abandon their clients and where they are prohibited from advising their clients on negotiating price, terms or on any other matter that could be construed as a detriment to either party – in other words the agent can’t really do anything. Dual agency usually arises after the agent has created a bond of trust with his clients and comes up suddenly and leaves the clients with few options for professional guidance. Despite this thorough and complete degradation in service for which the agent was hired to perform, the agent still collects full compensation. Most attorneys recommend avoiding dual agency at all costs. Many believe that dual agency is akin to fraud and subjects clients to an unfair and impossible situation. CAARE recommends avoiding dual agency at all costs – that means hiring a small brokerage firm where dual agency is least likely to arise.
Buyers are rarely or properly warned that signing in to an open house means that they are giving up their right to have their own agent represent them in buying that house. Once a buyer signs in, the listing agent will typically refuse to split their commission with any other agent. Unless the buyer is willing to pay their own agent and watch the listing agent suck an additional full commission out of the equity of the house, the buyer is stuck. It’s a very dark and treacherous tactic to impose on buyers and sellers, especially if the buyer really wants to buy the open house. Nevertheless, it is standard practice in all the states that we researched.
The fact that Realtors are so willing to subject buyers and sellers to dual agency is really troubling to us, especially when you take into account that a major Realtor survey3 indicated that two of the most important reasons consumers hire Realtors are to help negotiate price and terms. Realtors know how important these negotiating services are to buyers and sellers, yet they are more than willing to revoke those services with little more than a standard disclosure statement that is often misunderstood, poorly drafted and given at a time when it is often meaningless to the consumer.
In conclusion, open houses are bad for consumers and Realtors know it. Don’t let your agent talk you into vacating your home so that they can use it as their personal free sales office to generate leads. And if you’re a buyer, don’t even think about walking into an open house if you are even remotely interested in buying it as you will likely lose your right to hire your own agent to help you negotiate the price and terms.
1 Realtor Article: Who Benefits from an Open House? Not clients.
2 Survey slams Door on Open Houses: Survey of CRS agents (Certified Residential Specialists) agents are considered to be some of the most experienced and knowledgeable agents.
3National Association of Realtors – Profile of Home Buyers and Sellers 2010