Comparing an Open House vs Private Showing Strategy

The realtor perspective on hosting an Open House vs private showing used to be simple. Serious buyers will plan private showings with their agent. Therefore the collective wisdom used to be that, only in rare occasions, would the buyer originally attend the Open House. This combination of beliefs would lead listing agents to avoid holding Open Houses too.

…but the role of Open Houses has changed post NAR settlement and this means that listing agents should re-evaluate how/whether to hold Open Houses.

That’s what we’ll cover here. Here’s a few of the topics if you want to skip ahead.

Understanding Open Houses Post NAR Settlement

• Pros of Open Houses
• Cons of Open Houses

Evaluating Private Showings after the NAR Settlement

• Pros of By Showings
• Cons of By Showings

Evaluating Open Houses

Open houses have long been a practice of bringing buyers to a listing, but they’ve also served a purpose beyond simply selling the immediate property.

Many agents – especially newer agents – have used Open Houses to meet buyers that may not truly be interested in the subject property. Many point to this secondary activity as a reason NOT to hold an Open House…and instead insist only on taking serious buyers to the property using showings by appointment.

However as we’ll cover below, with the NAR settlement many buyers are going to be posed with a big decision: do I sign a buyer agreement (which will detail compensation to the agent) in order to go on property showings?

Pros of Open Houses

Over 50% of buyers attend Open Houses at some point in their home buying journey (and this data was taken from a NAR survey pre-dating the settlement from the commissions lawsuit).

Furthermore, Open Houses can be a great way to audition your prowess as an agent in a casual setting…with the hope of securing a more formal buyer (or even seller) consultation. Remember that 68% of consumers work with the first agent they meet in person.

Sidenote: Open Houses are great ways to begin relationships with nearby owners (aka nosey neighbors) that visit Open Houses in their neighborhood.

Now with the NAR Settlement Open Houses are the only way for buyers to view a property without a signed buyers agreement. This is going to increase the share of buyers that visit Open Houses well past 50%.

For agents trying to prepare for this change, we recommend trying our free digital Open House sign-in app.

Cons of Open Houses

Historically Open Houses have been thought of as an inconvenience to everyone involved.

• Sellers don’t want a bunch of people rummaging through their home
• Buyers don’t want to take time off their weekend to pile into an Open House alongside their competition (especially if they can schedule a 1 on 1 showing at a more convenient time)
• Agents don’t want to miss out on a weekend to risk sitting an Open House that may or may not produce any results.

Not to mention that most markets have been through a pretty consistent sellers market where most listings don’t need an Open House to attract competing offers.

But remember these reasons all easily held up pre NAR settlement…but now there are new dynamics at play.

One significant concern that doesn’t change with the NAR settlement is around security. An Open House invites numerous strangers into the seller’s home simultaneously which can be unnerving to say the least. What if something’s stolen or damaged? What if extremely nosey neighbors start rummaging through the sellers belongings?

Sure these are unlikely occurrences…and while the spirit of an Open House is optimistic, the reality is that an agent also needs to manage against any of these unfortunate behaviors.

And the reality is that, with an Open House, agents have limited power over who walks onto the property… which is why Open House safety is a major concern. The lack of control when it comes to preventing major issues leads many in the industry to question the overall benefit of Open House.

Evaluating Private Showings

For a long time individual, by appointment, showings are how buyers toured properties they eventually purchased. When compared to Open Houses, showings have been thought of the way that serious buyers visited prospective real estate purchases. However, with the NAR settlement, some of that may change and we’ll get into that below.

Pros of Private Showings

Showings have numerous advantages for buyers and buyers agents but time management is one of the big ones. With showings, an agent can coordinate a block of time with the buyers and schedule back to back showings of all properties they may be interested in.

Plus with showings, buyers can take their time, and not feel rushed and/or uncomfortable by other strangers viewing the property or with a nosey listing agent.

Also with technological advancements, showings can be done digitally where the buyer could be remote and their agent could be physically at the property streaming the entire walkthrough via a video call like Facetime. This could be particularly helpful for relocations or for buyers that have extremely busy schedules.

Cons of Private Showings

Pre NAR Settlement, buyers didn’t have a lot of reasons NOT to go on Showings, but with the NAR settlement, there’s a major impediment to buyers going on showings…the buyer agreement.

Buyers are now required to sign an agreement which details compensation before any showing.

Keep in mind some brokers are using a “touring agreement” which involves no compensation (this was first popularized by Zillow in the aftermath of the NAR Settlement).

Regardless, these agreements aren’t required for Open Houses and that’s going to put buyers in a difficult position in deciding between showings and Open Houses.

In conclusion, the dynamics between Open Houses and showings have evolved significantly, particularly in light of the recent NAR settlement. While Open Houses traditionally served as a more casual introduction to the market for potential buyers, they now represent a crucial opportunity for agents to connect with clients in a way that does not require a buyer agreement. On the other hand, showings, once the hallmark of serious buyer interest, now carry the additional hurdle of requiring signed agreements, which may deter some buyers. As the landscape of real estate continues to shift, agents must reassess their strategies, considering both the benefits and challenges of Open Houses and showings. Ultimately, a balanced approach that leverages the strengths of both methods may prove most effective in meeting the needs of today’s buyers and sellers.