Open homes – questionable value for sellers so why are they so common?
In my recent analysis of the inefficiencies
of the real estate industry I estimated that an average real estate agent spent
13% of their working week undertaking and organising open homes – that would amount to around
five and a half hours. On reflection I would now like to add this segment of their working week to the 64% of their time spent by prospecting for new business. Why? Because
open homes are largely a profiling and prospecting tool benefiting the agent
more than the vendor.
Don’t take my word for it – ask a real estate agent. Steve Koerber, a respected and highly professional agent I know wrote in a post a couple of years ago that “The truth about open homes might set you free”. He stated that based on his calculation an open home had about a 5% chance of achieving a sale.
In rereading his post again the other day, I was reminded of a real estate training session I sat through a number of years ago run by a highly charismatic auctioneer and trainer.
He related a similar story although he was much more positive of open homes. His mental imagery for the attendees (largely rookie agents) was to reflect on the fact that that only 1 in 30 visitors to an open home were likely to be a buyer. So rather than get despondent, think of each visitor as coming in the door to give you money! He stated that based on your prospective commission of $12,000 that you as an agent were going to get for selling a house, each open home visitor was actually worth $400 – his imagery was to whisper a mental “Ka-ching” to yourself each time another visitor walked in “Ka-ching $400” - one step closer to 30 people in total!
Despite this inefficiency of hosting open homes, properties for sale still need to be viewed, as I am sure very few buyers would buy sight-unseen. Far more efficient is the process of scheduled private inspections arranged for serious buyers. This is by far and away the most common process for real estate across the globe. Sellers don’t need to waste time and effort for weekend viewings that are for the primary benefit of nosey neighbours and profile seeking agents.
An inspection professionally arranged between a serious buyer and the selling agent adds professionalism to the real estate process.
But hold on, ask yourself, does the agent need to be a part of the inspection process? Why not allow committed buyers to meet committed sellers. Not to usurp the process; but to allow a more relaxed and engaging interaction. Such a system is advocated by 200Square – the innovative real estate company whose approach to selling property is using a licensed real estate agent to facilitate the transaction whilst allowing technology and smart buyers and sellers to undertake the components of the process where the agent really adds little value – inspections and open homes. In that way they can offer a full service licensed real estate solution at a fraction of the cost of traditional agents.
Coincidentally 200Square tweeted today the feedback from one of their buyer clients, demonstrating that removing the agent in the process of the inspection removed pressure and created a relaxed opportunity to view the property guided by the sellers.
Time for a change? time to question the value of some components of the real estate industry process in order to increase efficiency and add value.