What is an open house?
It is a scheduled time in which the home seller vacates the home and allow buyers (with and without representation) to tour their home, typically with one real estate agent in charge of it.
What you should know as a seller
At times, it can be a safety issue
Anyone can come through and look at your home, which could include nosy neighbors and nosy people in general. It can also include buyers that have no interest in buying your home but instead are just curious or just “getting their feet wet.”
There is only one agent typically at the home in charge of the unrepresented homebuyer (buyers attending without an agent). If the agent is sitting in the kitchen or talking with someone in the living room, no one is watching the people upstairs who are walking through your bedroom, looking in your closets, and opening your drawers. This could open up an opportunity for theft when someone is unsupervised.
Agents utilize Open Houses as a way to find new clients
In the multiple agent forums that we follow, most conversations about Open Houses discuss collecting names and converting those leads into a new client. A lot of the commentary in these forums instructs agents to knock on the neighbors doors to invite them to the Open House. Not because your neighbors are going to buy your house, but because they might sell theirs and the agent wants them as a client.
Even studies written before the explosion on online listings showed that open houses are not a successful tool in selling a home, but are successful for agents as it puts them in front of homebuyers who might not yet have representation.
As a home seller, you clean your house, find a place for your pets, pack up your kids stuff, pack up your kids and leave your house for four hours so that an agent can meet new clients. What is the benefit for us as the seller for putting in this much time and rescheduling for rare results? If our home is being used as a marketing tool for the agent, should we be compensated for our time?
What you should know as a Homebuyer
It can open up procuring cause issues
Here is where it gets murky…
In real estate, it is all about who brought the buyer or the procuring cause. If you are going to an open house unrepresented, and you fill out the form when you first get there and talk with that agent, it leaves the door open for them to say that they were the procuring cause if you end up making an offer on that home. This can cause a potential issue if you want to use a different agent than the one you spoke with at the open house.
It can potentially put you in a dual agency situation
The other situation that can occur when attending an open house without representation is dual agency. This is when the listing agent says "hey, I will represent you and the buyer to get this deal done!" But remember, as we talked about last week in regards to pocket listings, with dual agency, the brokerage (and potentially the agent) walk away with way more money and you as a buyer don't have anyone with a fiduciary responsibility to you. As a reminder, dual agency is not legal in some states.
If you are curious about dual agency and procuring causes, Caare.org
has a great article about this issue.
In our opinion, there is no great benefit for a home seller to host an open house, especially in a seller's market. If your agent is pushing for an open house, be sure to have them explain their reasoning and benefits to hosting it before you agree.