Friday, August 11, 2006

Open House: Real Dangers

The open house is a debated tool for selling homes. It can be good, bad and dangerous. Let me explain;

Actual marketing studies by the National Association of Realtors show that, when asked, the ovewhelming majority of home buyers indicate they found there home through a Realtor. Second was the Internet (which is great) and then those people turned to a real estate professional for showings, comps and closing the deal.

"Although most buyers surf the Web, only 11 percent first learned about the home they bought on the Internet, up from 8 percent in 2001. Forty-one percent first learned about their home from a real estate agent, while yard signs accounted for 16 percent; several categories accounted for 7 percent each: newspapers, builders, and a friend, neighbor or relative. “What this tells is us that most people use a wide variety of sources in searching for a home, but the single most important resource is a real estate professional,” Whatley said."

If you read the story linked above, it also states that 16% learned about there home from yard signs. This is backed by the findings that many people who "move-up" into their bigger, badder home purchase, so so in the same neighborhood (or very close by).

So signs, the Internet advertising, and Me (and others sort of like me) are a good bet that a buyer will show up at your door. So why use open houses?

Well, the sign thing helps. When I do an open house, I use 8 to 10 "horse-style" street signs at major traffic areas surrounding the property. It's nuts, but if I'm going to sit at a home in the middle of the day on a beautiful weekend, I'm going to make sure someone knows I'm there.

The open house also provides the opportunity for the many agents with many buyer clients to schedule their clients a showing (while being somewhere else). Let me explain this "pyramid scheme".

An great agent has both buyer clients and seller clients. The agent wants to have an open house for their seller's benefit. However, they also have buyers out that day, and two other (listings) open houses to man.

So the open house actually allows your agent to man another open house and meet people that may be interested in your home. All the while, another agent, possibly a new agent without home listings, mans your home so buyers can come by... and so on, and so on. You can be in two places at once, essentially, and meet more buyers for your listings.

About 16% of buyers learn about a property by a sign. So, we actually procure the buyers as a whole in many combined ways... and the open house acts as conveinent way for buyers to drop by on a place they are interested in... no matter how they learned about the place.

Lets think about this. Our technology allows people to shop homes over the Internet and then contact an agent for the places they like... which is far superior than flipping through print ads. Also, back in the day, the open house was the Internet... it was the only way to see a place and the serious buyers had less means to focus their search.

The focus now is to get the property in front of agents and Internet shoppers, not just people who randomly walk down your street. The former is where today's serious buyers are.

BTW... open houses can be very dangerous for those who let their guard down. The linked story is really awful, but we are faced with this fact.

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