Is a real estate open house necessary after COVID?

Real estate open houses, which have been around for generations, came to an abrupt halt in March 2020. But do we actually need them back?

It was Saturday, March 14th, 2020 and Ryan was hosting an open house for his clients listing on College Ave in Guelph. It was busy, people were coming and going as they normally did. But it was also a little awkward for both Ryan and the attendees. COVID uneasiness was kicking in and suddenly there was a disclaimer with every handshake “Oh, it’s OK I’m not sick”.

Weeks later, public open houses were banned. These are the traditional open houses that you see advertised with a listing where anyone could walk through a house from 2-4pm. They’d take a look around, whether they were serious buyers, nosy neighbours or someone just passing by. No appointment was necessary, you’d just enter the home.

But the big question is, do we even need open houses?

It depends on who you talk to. Looking at it from a macro perspective, the real estate market is getting more and more action from the Greater Toronto Area (GTA) than ever before. This is without an open house for over a year. This would imply (and confirm) that open houses were not a driving factor for the sale of your home.

Open houses could have been positioned as a marketing tool pre-COVID. Now, many other marketing tools stepped in to replace an open house over the past year. This would include greater reliance on photos, greater reliance on floor plans and video.

First time buyers tend to attend open houses. They may be just starting the process and don’t have a Realtor they can ask questions to. Or they want to figure out what their funds will buy them. And the Realtor working the open house should be able to answer these questions.

In Ryan’s former corporate marketing career, one of the key elements was determining a “decision tree” of a consumer. What makes them put an offer on a house? What factors contribute to their decisions? 

How did the pandemic influence decision making?

Pre-pandemic, potential buyers may have looked at photos and decided they liked the house. In many cases, the most logical next step would be to make the drive for an open house. This is especially true for that those that didn’t have a realtor. Then, if they still liked it, they’d find a Realtor and come back one more time before making a decision to submit an offer.

Post pandemic, buyers better scrutinize the photos (which Realtors have strived to make better in most cases). Buyers can now can see floorplans (if the Realtor decides to invest in this, which in our opinion is a key element along with 360 photos of the rooms ) and sometimes video. If they like it, they make an appointment with their Realtor to see it and then make a decision.

See what happened there? The role of the open house, that extra decision, is gone. It still started the same way and ended the same way. But decisions are made more efficiently and didn’t require an open house.

We also notice some seasonality changes as a result of COVID: less definitive slow periods followed by less definitive peak periods. Now, we’re seeing people selling any time of year, including realizing pro’s of selling in winter.

So why do sellers even have an open house?

There is significant debate within Realtors about this. Some insist that it’s a no obligation way for buyers to see a house before deciding if it’s something they want to call their Realtor about. That it was just another marketing element to help sell the home.

But think about this: If you were a potential buyer and saw your “forever home” but couldn’t attend an open house, would you throw your hands in the air and walk away from pursuing your dream home? Of course not.

Anyone who is serious about buying a house will make an appointment with a Realtor to come to a private showing of their own. They were eventually going to do that anyways.  We believe open houses definitely had serious buyers attend, but there were also roughly 50% who were just window shopping, with no real intent to make a decision to buy the house. 

The main role of an open house is for Realtors to gain clients

Let’s just be honest. The role of an open house is for a Realtor to gain new clients- in particular it’s a good tool for new real estate agents. It’s a good way to interact with clients and get your feet wet. And there is nothing wrong with that. After all, it’s a sales job and what better way to get perspective clients than have them walk through the front door and talk to you about buying houses!

However, when open houses turn into mini-client interviews, the Realtor has lost touch of the objective- to sell the house they’re standing in, not themselves. Sign up sheets are a key indication that this is happening, because the Realtor is often going to call or email you to become their client.

We did gain a fair number of wonderful clients from open houses, but that’s not why we were there. If someone wanted to work with us a result of an open house, they gave us their info or called us later. We didn’t ever use sign up sheets because in our mind, we were there to sell our clients house.

Should we go back to open houses?

We say no. But since it’s our clients house, if they want an open house we’ll  happily do it. Like many improvements to products and services as a result of COVID, we believe open houses are something of the past that don’t really get sellers the interest they’re hoping it will

With better technology available the open house step can be eliminated. Products like HouseSigma which provide greater data to consumers, has better informed buyers on details that open houses would provide. Realtors need to up their game, which is the evolution of the role.

Some would argue that despite the technology advances, there is still something tangible about physically going to a house and walking through it. The flow sometimes can’t be measured by photos. 

The other key thing our clients tell us: smell is a very important factor in decision making for a home. A strong smoke smell, a musty smell or clean smell can easily influence a decision to buy or not. 

In conclusion

We believe open houses definitely play a role for sellers, buyers and Realtors. But we also believe that the market has proven it can still rise (to record highs!) with or without them. It’s NOT necessary.

We like to think of open houses in the same way as the landline for phones. At one time people thought that everyone needed it. And they were right- everyone needs a phone. But cell phones proved that you can still have the phone- or in this case, the home- without having it attached to a wall in the kitchen. It’s a different way to ultimately get you the same result. 

Beth and Ryan are Guelph Realtors- you can reach them here