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Open House Awareness Weekend - Just Say No

The National Association of Realtors ("NAR") holds a “Realtor Nationwide Open House Weekend,” every year. This event is a farce by all accounts especially their own. Open houses are one of the most deceitful tools Realtors use to deprive both sellers and buyers of their right to representation and their ability to negotiate their fees. We were quoted in the Wall Street Journal's SmartMoney on this topic (click here to read the article (we are point 4)).  Even local Realtor Associations are pulling out all the stops to publicize this event that is exploitive and harmful to consumers.  Expect local and national TV, radio and print promotions (web page has been removed) 

Our advice: DO NOT HOST OR VISIT AN OPEN HOUSE  

Even NAR’s "talking points" (as first cited by Inmann News) are careful crafted to avoid discussing any direct benefits for sellers and buyers; there are none.

Using NAR's own data and surveys, we can prove that open houses are a waste of time for everyone except Realtors (who exploit this free networking opportunity).  Open houses do not help sellers sell homes and they certainly do not help buyers buy homes.   In fact, open houses are not only bad for consumers they are downright dangerous.

Open House Weekend – Criminals Welcome

Not only do open houses displace sellers and cause them inconvenience (cleaning, pet care and other preparation), but they put sellers and their belongings (and their Realtor) at tremendous risk.  Although there are no Realtor sponsored studies on how robberies, burglaries and other violent crimes are linked to open houses, Realtors are constantly reminded by NAR about how dangerous they can be for both their clients and themselves.   Open houses are the perfect resource for criminals. Not only can any criminal just walk in to an open house and case it…they are invited!   There is no screening process to determine if they can afford the house or if they have a criminal record.   

Criminals going through an open house are presented with a wealth of opportunities depending upon the type of crime they intend to commit.  As decoys or other visitors distract the Realtor, the criminal will typically have access to the entire house and often see calendars identifying when the sellers will be gone, pictures of children and other vulnerable family members, location of valuables and a lot more.  In addition, the Realtor herself may be in danger of a violent crime if there are no other visitors and she is alone.  Open houses are a terrible security risk.

Here is a recent story of a Realtor rummaging through someone's house:

Did We Mention That Open Houses Do Not Sell Houses?

In a NAR Study 1, when buyers were asked where did they first find out about the house they were actually going to buy, open houses did not even make the top ten list as its own category.  The top three were the internet, real estate agents and yard signs accounting for 88% of home buyers.  At a real estate continuing education class called, “Filling the Pipeline,” (we are still not sure why real estate agents get credit for this class) where this statistic was discussed, it was asked, “Why even hold an open house if they don’t sell houses?”  The answer was disturbing, “Weren’t you listening earlier in the class?  The reason to hold open houses is to “tag buyers.””  The instructor went on to state that only a very small percentage of open houses result in the selling of the house and that “tagging” the buyer should be the goal.

In a survey of some of the top CRS Realtors2 in the country (Certified Residential Specialists "CRS" is the most prestigious of all Realtor designations), most of them agreed that open houses did NOT help sell the home that was being showcased. And most of them agreed that open houses helped them generate new listing contracts and that most people attending open houses aren’t even serious buyers. They rated the MLS and yard signs as the most effective marketing techniques and put open houses at the bottom of the list.

Buyer and Seller Lose Their Right to Representation

Even in the extreme situation where an open house actually sells, the consequence to the buyer and seller is that they lose their right to representation.  The agent sitting in the open house represents the seller so if a buyer buys the house, a dual agency would be created (can you say, “Serve two masters”).  A dual agency is a misnomer and really means no agency at all.  In a dual agency, the real estate broker gets paid a double commission and is prohibited from assisting either party in negotiating price or terms (the two most important reasons consumers hire Realtors).  In other words, the broker gets paid twice as much for providing less than half the service.  Learn about dual agency by clicking here.

Just the very act of a buyer walking into an open house can create the potential for a commission dispute in which the seller’s agent would lay claim to the double commission and refuse to split their commission with a buyer agent brought into the transaction later on.  In other words, the buyer is potentially giving up their right to representation just by walking into the house.

CAARE has created an experimental Open House Form for buyers that asks the listing broker to agree to share their commission split with the unrepresented buyer, instead of the keeping it all to themselves or sharing with another broker.  The logic is that since they were willing to share this money with another broker representing the buyer, then they should have no problem sharing this same amount with the buyer who could use the money to hire an attorney to draft the documents.  Here is a link to that article and the form.

Just Say No

Sellers, we recommend canceling your open house.  They are a waste of your time, they put you and your belongings at substantial risk and only serve to help your Realtor network for other buyers and sellers.  And if you do hold an open house, check your real estate representation contract and your insurance policy to see if you are properly protected in the event of a bad act against you, your belongings, your beloved ones or your Realtor.

Buyers, do not visit an open house unless you are absolutely sure you have no interest in buying it.  If you do have an interest in the open house, then hire your own buyer broker and negotiate a discount on the commission (see our post on buyer brokers who rebate by clicking here).  Commissions are designed to be split between the buyer broker and the seller’s broker.  You do not save any money by using the open house agent, all you do is ensure that broker will collect a double commission and you will lose your right to representation.  Since it does not cost any more, hire your own agent.

In addition, by hiring your own agent (learn how by clicking here) you can schedule a private showing of the house with your agent and not have to deal with the crowds. 

1 National Association of Realtors - Profile of Home Buyers and Sellers 2010


2  Survey slams Door on Open Houses:   Survey of CRS agents (Certified Residential Specialists) agents are considered to be some of the most experienced and knowledgeable agents.