“Open houses only attract tire kickers and thieves.”
“No, open houses work every time.”
These are some of the opinions about them and, as you can see, it’s another controversial topic as there are many in the area of real estate marketing.
For some it works, for others, it doesn’t. And depending on which side you are on, you will identify with certain opinions.
But do open houses really sell homes, and do serious buyers go there?
A well-organized and previously promoted open house event can give you a showing to sales conversion rate of 5% compared to a showing to sales conversion rate of 10% for individual showings.
So, yes, it sells houses, and it also attracts serious buyers, but at the same time, it sells fewer properties and attracts fewer serious buyers than other methods.
Open houses are prone to be used in different TV shows because they are essentially events and are easier and less boring to film than individual showings.
So, motivated by such shows, you might start considering doing one as a real estate professional or individual seller in the hope to increase your chances of a sale.
But looking at some facts and numbers, there are some pitfalls and fallacies involved.
In this article, I will look a bit deeper into some real numbers and bring some clarity in the readily available anecdotal evidence that can be found online.
What Are Open Houses?
An open house is basically an offline marketing event in which a seller or a realtor opens a property to the public.
The aim is obviously to generate as many serious buyer leads as possible.
Everyone can just drop by at any time (well, not exactly any time but during the open house time frame) and take a tour of the house.
This event is usually promoted beforehand, but also signs are placed in the neighborhood and at least on the property, so that drive-bys can notice it.
A well-prepared open house is prepared with some additional elements that are aimed to make a good impression, such as staged rooms, some snacks, and some brochures or other printer material about the property for sale.
It often benefits real estate agents to get the word out about their business and to make their seller client happy.
People visiting could become future clients for other business opportunities.
The Reality, Buyer Statistics and Conversion Rates of Open Houses
Different real estate websites have different opinions about the effectiveness of open houses.
This one, for example, claims that it won’t do much if the home is not located in a very popular neighborhood with busy streets nearby.
Potential buyers that are passing by and take a tour might come back later to buy, but this could have happened even without an open house event.
Very often, the only participants of an open house will be people that are living close by and are likely “tire kickers” and just curious.
Another effect that probably reduces the positive effect of an open house is that most potential buyers work with a real estate agent and will do mostly private tours.
There is another group of not-so-serious potential buyers participating in open houses, namely the first time home buyers.
They often use those events to just get inspiration and see if a particular neighborhood is suitable for them.
But this also means that the open house is unlikely to lead to a sale.
The least serious group of buyers, who don’t even deserve called that way, is made of shady people or thieves that can take advantage of an open house situation and leave with the newest Alexa voice system under their shirt.
This website even goes so far as to call open houses a waste of time for the seller and as unnecessary in the digital age.
Well, in this new age where social distancing is popular, the author might even have a point there.
He also confirms more or less the already mentioned arguments from the other website mentioned above.
One of the coinciding arguments is that real estate agents benefit the most from open houses because they can generate further business, but not directly related to the sale of the particular property the open house event takes place for.
Zillow is a bit more positive about open houses, trying to inject some statistics.
According to them, they work underpinning this statement with the fact that 72% of sellers in urban areas, 63% of sellers in suburban areas, and 47% of sellers in rural areas do open houses.
But this doesn’t actually prove they work and the article later falls short in showing statistics about the effectiveness.
Here, the author only mentions that it’s hard to say what percentage of home sales can be traced back to an open house event and that many realtors agree that open houses are effective.
So, up to this point I showed you only more or less anecdotal evidence and different opinions that lean toward open houses not being effective, or not conclusive of being directly a causative agent of property sales.
Are There Actual Stats That Can Help Determine The Effectiveness of Open Houses?
One statistic I found was by the National Association of Realtors.
According to their study published in 2019 as ‘National Association of REALTORS® Profile of Home Buyers and Sellers’, only 6% of buyers found the home they purchased following a yard sign or an open house sign (source).
For sale by owner methods used to market a home were in 24% of the cases open house events, according to the same study.
According to an individual statistic published in the Realtor Magazine by a realtor couple, 20% of potential buyers looking for low- and mid-price points use open houses to decide which property to buy the next weekend.
And 30% of all potential buyers in the luxury property segment go to open houses to decide which house to buy the coming weekend.
Their statistics come from more than 1,000 houses sold and thousands of coaching calls conducted.
But what about actual sales conversion rates, so we have something to compare to for example online marketing methods?
It wasn’t easy but I found some conversion numbers about open houses.
But take them with a grain of salt, since the stats might not be that representative and the author follows a certain strategy to organize such an event.
So, they are likely highly optimized and thus achieve above average results.
On average, 6 people come visit to the property per open house.
After 90 days of 2 open houses per week, a total of 72 leads could be generated.
The total number of generated potential deals after 90 days was 5.
Maintaining the average of 6 people (corresponding to online traffic) per house, this would mean a total of 72 visitors after 90 days, and a (foot) traffic to sales conversion rate of 7%.
After 6 months, a total of 14 potential deals could be generated.
With a total of 6x4x6=144 visitors, this would mean a (foot) traffic to sales conversion rate of 9.7%.
Maintaining the same number of open houses per week, after one year, it is claimed that 288 leads and 29 potential deals could be generated.
With 2 open houses and 6 visitors on average per week, this would be a total of 576 open house visitors and a (foot) traffic to sales conversion rate of 5%.
So, you can see that the sales conversion rate averaged out over the year and probably comes closer to representative data.
Unfortunately, it wasn’t clear to me from the source if these deals actually closed, because they were labeled as “potential” deals (source).
Let’ compare these conversion rate metrics to some online marketing methods.
In the real estate industry, the traffic to lead conversion rate of Facebook Ads is 10.68%, that of Google Ads is 5.31%, and lastly, that of Phone Outreach is 8.21%.
Assuming you convert the generated leads by a rate of 10% to sales, the traffic to sales conversion rates would be 1.06% for Facebook Ads, 0.531% for Google Ads, and 0.821% for phone outreach respectively.
This is a rough and undifferentiated estimation and you actually should apply different lead to sales conversion rates for each marketing channel.
Because, for example, via Facebook Ads on one hand you get better traffic to lead conversion rate than for Google Ads, but leads have often a lower quality than those from Google Ads, where a potential lead is more often searching already for an existing need.
In the Google Ads scenario, the potential customer is in a more advanced stage of the customer journey.
I already covered the customer journey in my article about real estate content marketing strategies here.
So, let’s just settle with an average of the three numbers from above, which would be 0.8%.
This number makes the open house (foot) traffic to sales conversion rate of 5% look pretty good.
So, up to this point we can conclude that by directly comparing the numbers to other traffic to sales conversion rates of digital marketing methods, open houses look pretty good if and when they are done in an organized manner and carried out in ways that they increase the chances of success.
But if you take a second glance at this 5%, my comparison is kind of misleading because people coming to an open house strictly speaking can’t be considered as ‘cold traffic’ and are already a bit further advanced in the sales funnel.
But the above digital marketing traffic to sales conversion rates are referring to cold traffic.
You will learn why this is in the next section, when we dig a bit deeper on how you actually prepare an open house event so it has the highest chances of success.
What Can Be Done to Increase the Success Rate of Open Houses?
To increase your chances of success for an open house event, you basically need to treat it like a product launch, which has a pre-launch phase and the actual launch phase.
What goes into the preparation of the pre-launch?
On one hand, you prepare a dedicated page on your website or another provider, such as leadpages or where you have available the basic property information and media such as professional pictures, videos (including video tours).
It’s also a page where you capture leads that confirm the participation of the event.
This is also important to be able to follow later on, even if some of the leads don’t show up.
In order to be able to create high quality media for advertising the event and have the property ready for the event itself, you will want to do the following:
For Advertising the Event (Pre-Launch):
- Have the most important rooms staged
- Have professional pictures and videos taken (optionally 3D video tours)
- Create an event lead capture page
For the Event Itself (Launch):
- Open window coverings, blinds, drapes and every lamp and overhead fixture turned on
- Ensure there are no vehicles in the driveway and that you ask neighbors to avoid parking in front of the house
Have some seasonal house photographs ready, which show how the property looks like during different seasons of the year
- Avoid air fresheners, but use flowers instead
Organize snacks and refreshments for the date of the event
- Have print materials ready, such as brochures (if you are a realtor, a type of catalog of your agency, where also other properties are displayed), four-color flyers, pamphlets and brochures with information about financing options, and inspection reports and evidence of major repairs, etc.
- Physical signs and the exact information about the location of the property, so that people don’t have to drive around the neighborhood and look for your house as if it were a needle in a haystack
All the above points that are directly related to the actual event are not necessary for the pre-launch phase, but many of them help to improve the online presence so you can better promote the event.
Advertise the Event About 5-7 days Beforehand (Pre-Launch Advertising)
This is still the pre-launch phase.
Now is the moment to create some buzz about the open house event in different steps.
You can get some inspiration for that by taking a look at the approach a digital product launch takes, which consists of a so called pre-launch sequence.
These are different pieces of content that are published on your website/blog, promoted to an email list you have already built and/or are separately advertised on pay per click advertising channels, such as Facebook Ads (by the way ideal for promoting events).
The content for the sequence itself is basically a type of sales letter that has different episodes that are related to each other.
The first piece of pre-launch content can be education-based related to the property in question.
You can get some inspiration about education-based content from my article about real estate content ideas.
In the digital product space, you would show an opportunity for change or transformation.
When it comes to a property, this could be some benefit about the location, where you show, for example, a close-by hiking trail or some oasis of peace, walkable neighborhood, etc.
The second piece of the pre-launch content is another education-based piece where the transformation is further shown.
Here, you would ideally show some locals residents who can now enjoy a new lifestyle in this neighborhood, after a stressful lifestyle beforehand having to drive for each little thing, but now can basically walk everywhere close-by.
What you use for this depends on the individual benefits that the house might provide to potential buyers.
The third piece of pre-launch content is a harder sale on the actual property and the open house event, where you can provide more concrete information about the property and the event itself.
These pieces of pre-launch content are ideally created in video format, because of all the conversion benefits video can give you (covered already in this article of mine)
If this sounds like too much work, you could also just do the third piece of content and just straight out promote the event. This can be also done in text format via email.
However, you will create more buzz and anticipation when also using the other two pieces of the pre-launch sequence.
On Which Marketing Channels to Promote Your Pre-Launch?
Most of the property listing websites are not suitable for optimal pre-launch promotion.
Here, you will just advertise the open house event with all the necessary information.
Property listings and similar pages you can use for that are for examples the following ones:
- Your standard multiple listing service website
- Nextdoor, where the event can be posted on its event calendar
But, actually, the most suitable advertising channel to cover the pre-launch and launch phase as already mentioned above would be Facebook which is generally pre-destined for promoting events.
Now, we can take a better second glance at the supposedly 5% (foot) traffic to sales conversion rate.
To get a better picture, you also need to factor in the traffic to lead conversion rate of Facebook event ads
According to some answers on Quora, the average traffic conversion rate for Facebook events is 1%.
For normal Facebook ads it’s 10.68%, and for the other property listing pages the self-reported traffic to lead conversion rate ranges between 2% and 5%.
Now, things don’t look so rosy anymore when we take conversion rates into consideration that are required to increase the chances of success of an open house, such as traffic to lead conversion rates of Facebook Ads and property listing websites.
Using the average of the above two numbers from Facebook Ads (5.84%), you would have an actual cold traffic to sales conversion rate of 0.29% for open houses.
Taking into consideration the average self-reported traffic to lead conversion rates of property listing sites (3.5%), we are talking about a cold traffic to sales conversion rate of 0.17%.
What about Private Showings?
To get an even better picture, let’s also compare the cold traffic to sales conversion rate between 0.17% and 0.29% of open houses to private individual showings.
We know according to the National Association of Realtors that a potential buyer visits on average 10 houses before making a decision (source).
These are individual showings and not open houses.
So, the odds are 1:10 that the house you are showing would be the one that the potential buyer would make a decision on.
When we translate this into a showing to sales ratio or showing to sales conversion rate this would mean 10%.
Similar marketing activities such as the ones mentioned above for pre-launching and launching an open house would also be done with similar conversion rates.
So, we don’t necessarily have to compare these metrics with each other but we can compare the showing to sales conversion rates.
We learned that by an ideally prepared and promoted open house we get a 5% (foot) traffic to sales conversion rate or showing to sales conversion rate.
Well, here you can see already that individual showings seem to have better conversion rates than open houses (10% vs. 5%).
Do Serious Buyers Really Go to Open Houses?
Getting to one of the last sections, let’s check if serious buyers really go to open houses.
Well, by the numbers I worked out above, you can already confirm that some serious buyers are going to open houses.
If not, there wouldn’t be the showing to sales conversion rate of 5% (provided a good organized open house event).
But on the flip side, that means also that about 95% are not serious buyers, and there are likely more tire kickers going to open houses than participating in a property tour through a private individual showing.
Remember the private individual showings can be considered to have a showing to sales conversion rate of 10%, meaning that only 90% are tire kickers (5% less than in the case of open houses).
This kind of makes sense, because for private individual showing curious people like drive-bys, inspiration seekers, competitors and gossipy neighbors can be easier filtered out than for open houses, if the respective real estate professional does a good job qualifying buyer leads over the phone before scheduling an individual showing appointment.
The Pros and Cons of Open Houses and a Comparison with Individual Showings
I will end this article with a little pro and con list and also with a comparison table which compares open houses with individual showings so you can make your own sound decision if hosting an open house is the best idea for you.
Let’s start with the pros and cons.
- You can show a house to several individual buyers at the same time and it can reduce the overhead that individual showings can create
- Can be more appealing to first time home buyers, not yet familiar with the buying process
- You can get exposure and create buzz about the respective property listing
- It is more laid back and there is less pressure for the potential buyer to make a decision
- You can collect different feedback from the visitors about the property, so you can improve the offer
- 20% of potential buyers looking for low- and mid-price points use open houses
- 30% of all potential buyers in the luxury property segment go to open houses
- The chances of a sale are lower (5%) compared to individual showings (10%)
- It will attract more tire kickers, and just curious people
- It can even attract some thieves who very much like some of the items used to stage some rooms
- It can be cumbersome to host an efficient open house (a lot of preparation and pre-launch advertising)
- Only 6% of buyers found the home they purchased an open house sign
How Do Open Houses Look Like Compared to Individual Showings?
Open Houses Individual Showings Higher Organizational Expense Lower Organizational Expense 5% Showing to Sales Conversion Rate 10% Showing to Sales Conversion Rate More difficult to pre-qualify potential buyers Easier to Pre-Qualify potential buyers Higher Risk of Theft Lower Risk of Theft Higher Likelihood of Attracting Tire Kickers Lower Likelihood of Attracting Tire Kickers Higher Promotional Expenses, if you want above average results Lower promotional expenses Can be slightly more beneficial to attract potential buyers from the luxury real estate and low to mid price segment Depends on the marketing strategy of the seller or real estate professional to attract certain types of potential buyer
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