“Open houses only attract tire kickers and thieves.”
“No, open houses are always successful and 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, they are successful. For others, they aren’t. And depending on which side you are on, you will identify with certain opinions.
But what about more fact-based analytical data? Can you say they are generally successful?
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.
They can be successful and attract serious buyers, but at the same time, they sell fewer properties and attract fewer serious buyers than other methods.
Open houses are prone to be used in different TV shows because they are 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 of increasing your chances of a sale.
But looking at some facts and numbers, some pitfalls and fallacies are involved.
In this article, I will look a bit deeper into some real numbers, clarify the readily available anecdotal evidence that can be found online, and cover how to do an open house.
What Is an Open House?
An open house is an offline marketing event where a seller or a realtor opens a property for sale 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 precisely 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 aimed to make a good impression, such as staged rooms, some snacks, and some brochures or other print material about the property for sale.
It often benefits real estate agents to get the word out about their business and make their seller clients happy.
People visiting could become future clients for other business opportunities.
Is an Open House a Good Idea? [Anecdotal Evidence & Statistics]
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 trendy neighborhood with busy streets nearby.
Potential buyers that are passing by and taking 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 living close by and are likely “tire kickers” and just curious.
Another effect that probably reduces the positive impact of an open house is that most potential buyers work with a real estate agent and will do primarily 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 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 deserve to be called that way, is made of shady people or thieves who 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 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 are not directly related to the sale of the particular property the open house event takes place for.
Zillow is a bit more optimistic about open houses, trying to inject some statistics.
According to them, they work to underpin this statement because 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 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 a good idea, effective, or not conclusive of being directly a causative agent of property sales.
One statistic I found during my research 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 homes 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 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 to visit the property per open house.
After 90 days of 2 open houses per week, 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 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%.
Provided the same number of open houses per week was maintained, it is claimed that 288 leads and 29 potential deals could be generated after one year.
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.
Let’s 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%, and that of Google Ads is 3.9%.
Assuming you convert the generated leads with a closing rate of 27% to sales, the traffic to sales conversion rates would be 2.88% for Facebook Ads and 1.053% for Google Ads.
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 the one hand, you get better traffic to lead conversion rate than for Google Ads, but leads often have 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 customer journey stage.
I covered the customer journey in my article about real estate content marketing strategies here.
So, let’s just settle with an average of the two numbers from above, which would be 1.9665%.
This number makes the open house (foot) traffic-to-sales conversion rate of 5% look pretty good.
So, up to this point, the traffic to sales conversion rates of open houses look pretty good compared to digital marketing methods, provided they are done in an organized manner and carried out in ways that 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 ‘cold traffic’ and are already a bit further advanced in the sales funnel.
But the above digital marketing traffic to sales conversion rates refers to cold traffic.
In the next section, you will learn why this is when we dig deeper into how to do an open house event to have the highest chances of success.
How to Do an Open House
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 and the actual launch phases.
What Goes Into the Preparation of the Open House Pre-Launch?
On the 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 follow up if some of the leads don’t show up.
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 critical 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, four-color flyers, pamphlets, and brochures with information about financing options, inspection reports, 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 directly related to the actual event are not necessary for the pre-launch phase, but many of them help improve the online presence so you can better promote the event.
Advertise the Open House 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 looking at the approach a digital product launch takes, which consists of a so-called pre-launch sequence.
These are different pieces of content 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 with different episodes 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 nearby 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 local residents who can now enjoy a new lifestyle in this neighborhood, after a stressful lifestyle before 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 a video format because of all the conversion benefits video can give you (covered already in this article)
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 also be done in text format via email.
However, you will create more buzz and anticipation when using the other two pieces of the pre-launch sequence.
On Which Marketing Channels to Promote the Pre-Launch for Your Open House?
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 example, the following ones:
- Your standard multiple listing service websites
- 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 regular 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 consider conversion rates 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.
The average of the above numbers from Facebook event Ads (1%), and the property listing pages (2% and 5%), is 2.66%
Applying the closing rate of 27%, you would have an actual cold-traffic-to-sales conversion rate of 0.72% for open houses.
What about Private Showings?
Let’s also compare the cold-traffic-to-sales conversion rate of 0.72% of open houses to private individual showings to get an even better picture.
According to the National Association of Realtors, we know that a potential buyer visits on average 10 houses before making a decision (source).
These are individual showings and no open houses.
So, the odds are 1:10 that the house you are showing would be the one that the potential buyer would decide 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 those 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, but we can compare the showing to sales conversion rates.
We learned that we get a 5% (foot) traffic to sales conversion rate or showing to sales conversion rate by an ideally prepared and promoted open house.
Well, here you can see already that individual showings seem to have better conversion rates than open houses (10% vs. 5%).
Do Serious Buyers Go to Open Houses?
Getting to one of the last sections, let’s check if serious buyers really go to open houses.
By the numbers I worked out above, you can already confirm that some serious buyers will go to open houses.
If not, there wouldn’t be a showing-to-sales conversion rate of 5% (provided a well-organized and marketed open house event has been done beforehand).
On the flip side, that also means 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. Why?
Because it is easier to filter out curious people like drive-bys, inspiration seekers, competitors, and gossipy neighbors for a private individual showing than for open houses.
This is only provided 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 a comparison table that 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.
- It 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 additional feedback from the visitors about the property to 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 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.
- Here you can find a great complementary pro and con list about open houses.
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|
This article has been reviewed by our editorial team. It has been approved for publication in accordance with our editorial policy.