Real Estate Technology Blog | Real Estate Marketing Coach

Let me preface this report by stating emphatically that holding an open house is a terrible waste of time, marketing dollars and effort unless you can get someone else to do it for you. We’ll discuss a much better approach in a moment. Right now, let’s prevent this scenario:

You walk in the office on Monday, answer your phone, and hear: "Astute Agent? Hi, it’s Betty. You wouldn’t believe it but you know what I did?"

(And your heart sinks because you’re getting a clue…)

"I just happened to stop by at an Open House this weekend, you know, that darling little house over on Maple, and can you believe it… I loved it! So much so that I put an offer on it right then and there. Aren’t you excited for me?"

And you would be excited… except you’ve put in approximately 18 hours driving Betty all around town looking for a particular type home she said she wanted… and you never ever considered showing the Maple house because it was too small according to Betty… and you’ve spent roughly $150 on gas and sodas and…

The truth is… the public doesn’t necessarily know how Realtors® work. They don’t necessarily know that you won’t get paid if they decide to work through someone else. They don’t really know… unless you educate them to that effect. Or protect yourself… And provide "value added" service at the same time…

Enter the The Preferred Buyers Agreement!  Lock in buyers just like you lock in sellers. Get paid for you work. Protect your investment.

Now let’s optimize open houses…

Why Traditional Open Houses Don’t Work

A traditional open house is held on a weekend afternoon for a period of 2 to 4 hours. You run a number of advertisements in the local paper (competing with dozens of others all saying the same thing), post numerous signs around the neighborhood to point the way (taking up valuable time and energy and gas), hang banners and plant more signs in the front yard of the property (taking up even more valuable time and energy), place personal property brochures all over the house plus maybe a few "highlight" placards where appropriate (taking up even more valuable time and energy), place a couple drops of vanilla extract in the oven and crank the temperature on low (you gotta have the home-baked cookie smell!), situate all your work related goodies on the kitchen table for appearances… and you wait, and wait, and wait.

If you’re lucky a few tire kickers will show up or, perhaps, a neighbor or two. If you’re really lucky you’ll have a couple of actual, bona fide, seriously-thinking-about-buying-sometime-in-the-near-future prospects drop by.

And if you’re really, really, really lucky… you’ll somehow get past the awkward silence, "My gosh, Molly, it’s a salesperson" treatment, build rapport, and pick up a new buyer. They won’t buy that particular house, but what the heck. A lead is a lead is a lead. Right?

Wrong. Factor in your advertising costs. Your gas and time to plunk out the signs and pick them up. Your 2 to 4 hours sitting in the house effectively doing nothing and… I don’t know about you… but FIVE good solid leads might justify the time and expense. Certainly not one (and that one is if you are really, really, really lucky)!

Your chances of selling a particular property at open house are practically nil. Your chances of picking up a good solid buyer or two are practically nil. It happens, but not often enough or in enough quantity to justify your time and expense. Your chances of impressing the neighbors (in my opinion, the only justification for holding a traditional open house) isn’t that great unless you’ve gone all out and held an "open house gala"—a virtual block party complete with barbecue, banners, invitations, free drinks and a lot of visitors.

You will, of course, impress your sellers. After all, chances are the open house is the only time they actually see you attempting to sell their home. And because the open house has always been a major staple of listing presentations… sellers expect you to hold open house. Some sellers actually demand you hold their house open once every two or three weeks!

All in all, if you’re honest with yourself, I’m sure you have to agree that holding traditional open house requires too much effort and yields too few results.

So, first things first. STOP telling sellers that open houses sell houses. If open house is an integral part of your listing presentation—get another presentation!! If a seller signs with you based, primarily, upon your promise of holding open house… you’re doomed to many a wasted weekend and many a wasted dollar, I assure you. Cut it out right now!!

You need to be honest with your sellers. You need to be up front about the fact that open house are potentially a great tool for new agents to pick up a few new buyers. Open houses are a traditional way to meet new people and, potentially new clients. Not a very effective or efficient way, mind you, but traditional. It helps the new agent more than the seller. Because the new agent needs to get a "feel" for the market and the people. "Feelings" mean nothing to a serious seller. A serious seller needs "marketing" to effect the sale of their home in a timely manner. And traditional marketing isn’t good enough today. Today, the astute seller needs to embrace proactive versus reactive marketing. Etc., etc., etc.

Here’s what you need to do instead

Hold "Open House Tour."

Walter Sanford, a multi-million dollar producer and nationally known real estate trainer, used the "Open House Tour" way back in the late 70’s and throughout the 80’s and became very wealthy because of it. Today, Terry Hunefeld, a multi-million dollar producer and national sales trainer, uses what he calls the "Tour of Homes" as one of his major league marketing tools. The "Tour of Homes" has made (and continues to make) Terry a ton of money.

Now before we get into the mechanics of holding a money-making "Open House Tour", let’s talk a little about psychology. Motivational psychology, to be more exact. Consider:

THE REAL ESTATE BUSINESS IS ABOUT PEOPLE. LIVING, BREATHING, THINKING, FEELING, WALKING, TALKING HUMAN BEINGS.

And hear me on this: The amount of money you command in this business will be in direct proportion to your command of the human psyche. If you can get "into" the minds of your prospects, you can virtually write your own ticket.

True story. And the good news is that most of the work has already been done for you by hundreds upon hundreds of individuals and corporations who have spent years and upon years and millions upon millions of dollars researching the brain in an attempt to gain an understanding as to how it affects our behavior, our attitudes, and our buying motives.

An entire science has been built to discover the answer to one question: What are the underlying, psychological forces which cause one person to comply with the wishes and requests of another person?

In other words: What causes a person to say "Yes?"

Do you think the answer to that question would help you close more sales? Get more leads? Close for more appointments?

I think so. In fact, new brain research has provided the equivalent of a laser-guided smart missile. You can actually hone in on your "target" and push their "yes buttons" with amazing accuracy.

How does all this relate to holding an "Open House Tour?" Here’s a psyche principle:

"People assign more value to opportunities when they think they are less available."

This "scarcity" principle holds true for two reasons:

1) Things that are difficult to attain are typically more valuable (diamonds, gold, rare coins, antiques, a one-of-a-kind item) and,

2) As things become less accessible, we as humans lose more freedoms (to get what we want, when we want, on the terms we want). And, according to psychological reactance theory, we respond to the loss of freedoms by want to have them even more than before.

This "scarcity" principle is especially powerful when two conditions are present.

*  The scarce items are newly scarce. This heightens the perceived value.

*  We are most attracted to scarce resources when we compete with others for them.

Okay, armed with this knowledge, let’s put it to use. Let’s create a "feeding frenzy" of potential buyers for our listings. Let’s hold a "Tour."

Step #1—Obtain a call capture system to receive calls off your ads and "announce" your "Open House Tour".

Step #2—Determine which properties you want to hold on tour. You want to "schedule" approximately 20 to 30 minutes per property to allow for both showing and driving time. You also want to hold like homes in the same general price range on tour together. For instance, hold a tour of 4-6 homes all priced within a range of $200,000 to $350,000. Hold a separate tour for a range of higher priced homes.

Step #3—Map out a "route" for your tour. If possible, include a drive by of the school, local shopping centers, major access routes, etc. Assign a "time table" to your tour. For example, property A will be held open from 2:10 to 2:20. It takes all of ten minutes to drive to property B sooo… you’ll assign an open to property B at 2:35 to 2:45, etc. Map your route, schedule your times, and make adequate notes.

Now don’t panic. You’re probably thinking I’m nuts to even suggest you hold an open for only ten minutes. Trust me on this one. The logic and power will become apparent shortly.

Step #4—Inform your sellers as to the schedule and provide them with a written copy. Get the to commit to the schedule.

Step #5—Run small classified advertisements, about three ads per property you want to hold on tour, and include your voice mail number as the only contact number. (In the body of your voice mail message you can inform the listener as to your direct number if they desire more immediate attention.) An ad style which has worked wonders for us is:

Eastside Country, 3bd/2bth with pool and private fenced yard. Only $3,500 down, $717 per month, 8.25% APR. Open Saturday at 2:10 sharp. Call for directions. 24 hr recorded message, xxx-xxxx.

Step #6—Record your call capture script. Explain your "Open House Tour" and give them the precise time each particular property is open. Let your callers know in no uncertain terms that each property will only we open for FIVE minutes. If they are late to show up… too bad. The idea isn’t to take a leisurely stroll through a house… it is to make the most efficient use of their time by giving them the opportunity to see a number of homes within their price range in a very short period of time. Then, if they would like a private showing… you will be more than happy to provide one upon request.

Here’s a sample script:

"Thank you for calling Astute Agent’s Open House Hotline. This entire message is 3 minutes long and will describe a number of houses in the $200,000 to $350,000 price range, including the property described in the ad you just read, which will be held open for your inspection without an appointment this Saturday, April 13th. Each listed property will be held open for only FIVE minutes. Let me repeat that. Each listed property will be held open for only FIVE minutes. Why? Because I want to give you the opportunity to see a number of beautiful homes in one short, pleasant afternoon. Of course you don’t have to stay for the entire tour. You can choose to look at one home, two, or even all of them. It’s your choice. But remember, each home is only held open for FIVE minutes so don’t be late to arrive. If you like the home upon your first walk-through, I will be more than happy to schedule a private, full-time showing for you and your family. However, on Saturday, the homes will only be open for FIVE minutes.

Feel free to drive by any of these homes prior to Saturday’s tour. A brief description of the properties being offered on the Sat. tour as well as their showing times are:

123 Main Street. This lovely family sized home sports 3bd and 2bths and a second floor family room. It’s in excellent condition with a completely remodeled kitchen designed in white. A super-private fenced-in back yard makes it wonderful for the kids or those private family moments. The price is $210,000 and you can have it for only $4715 down with monthly payments of $1218 at 6.5% APR. 123 Main Street will be held open at exactly 2:10 in the afternoon. The doors will close at exactly 2:15.

234 Main Street. This lovely family sized home sports 3bd and 2bths and a second floor family room. It’s in excellent condition with a completely remodeled kitchen designed in white. A super-private fenced-in back yard makes it wonderful for the kids or those private family moments. The price is $285,233 and you can have it for only $9715 down with monthly payments of $1834 at 6.5% APR. 234 Main Street will be held open at exactly 2:30 in the afternoon. The doors will close at exactly 2:35.

555 End Street. This lovely family sized home sports 3bd and 2bths and a second floor family room. It’s in excellent condition with a completely remodeled kitchen designed in white. A super-private fenced-in back yard makes it wonderful for the kids or those private family moments. The price is $269,00and you can have it for only $2715 down with monthly payments of $2625 at 6.5% APR. 555 End Street will be held open at exactly 2:50 in the afternoon. The doors will close at exactly 2:55.

This is the end of the tour of Sat. April 13th. On this tour, you’ll be able to see a number of homes in a fairly short period of time. Please note we go from one home to another in a fairly rapid order. There will be many people on the tour. Please do not be late. It is unfair to the whole tour to hold up the tour to allow you to go through a home because you were late. Please be prompt.

If you need additional information concerning this tour or would like to know more about my free, no obligation, Preferred Home buyers Program, please feel free to call me direct at xxx-xxxx.

This is the end of this announcement. Please make your properties and times on your calendar. Thank you."

Step# 7—Prepare a property brochure for each property on your tour and make copies. You also want to provide your attendees a number of helpful handouts which educate them about the buying process, your services, and the numerous benefits they can obtain by working with you. You may want to provide all attendees with a copy of your Pre-Sell Package for Buyers. Perhaps a coupon to redeem for a free pre-qualification appointment. Perhaps a complete "how to get a pain free loan" package provided by your preferred lender at no cost to you. And you’ll want lots of business cards and a camera.

Step #8—Create packets for each attendee and area maps of schools, etc.

Step #9—Go to the first property on your tour. Arrive about ten minutes early. And wait. You will not unlock the door until precisely 2:10. At 2:10, you’ll unlock the door and hand out your packets of information to each attendee as they enter the house (or hand them out after leaving the first house… your choice. You want to be free to "guide" them through the property at a steady, even pace.)

Step #10—At precisely 2:20, round up all stragglers and lock the door. Chit chat for a minute and "announce" the next stop on your tour. Give everybody the address and the time you’re to unlock the door. Invite them to caravan with you if they’d like.

Step #11—Repeat until the tour is over.

Here’s what you can expect when you conduct your own "Open House Tour":

1.      Each property will have 3-10 new prospects waiting for you

2.      By the end of your tour you might have a caravan of 10-15 cars trailing you.

3.      You will see neighbors stand in awe at the activity you’ve generated (gee, I wonder who will get their listing call if you let them know you’re the one responsible for all that activity!)

4.      You will obtain multiple requests for private showings. (Remember you’ve embraced the principle of "scarcity." Every home on your tour will seem much more valuable to everybody because it is perceived as a scarce commodity. Unlike the traditional open house when most prospects walk into an empty house… all of your tour attendees are literally in competition for the same properties.)

5.      You will obtain multiple offers on a number of properties. Same principle of scarcity creates this wonderful phenomena.

So that’s it in a nutshell.

Don’t have listings? Don’t worry about it. Call a number of agents and ask to hold their houses open for them. You might get them to split the ads costs with your or even to pay for them completely. What have they go to lose? Who knows… you might get their home sold, and an "open house" certainly wouldn’t be lost on their sellers either!

How many homes are optimal? We’ve done upwards of 10 in an afternoon. Six seems to be the magic number. Six homes make for a good 2 hour day. (You don’t want to work too terribly hard!)

Try a Tour versus an Open House. And invite your sellers to watch from the sidelines. Take pictures of your turnouts. Use your pictures during your listing presentations. Use your pictures as mailouts to the neighbors to secure their listings. Use the pictures on the back of your property brochures to encourage people to sign their properties with you as well.

Leverage your tours to the max.

Happy Selling!

Brandon Patrick

Dean of Students

Real Estate Toolbox University