What Percentage of Homes Sell from an Open House?

Ever hear this quote?

“If you torture the data long enough, it’ll tell you anything you wanna know.”

We’re asking because in this post we’re going to look at one of the most tortured real estate stats: Open House data.

Plus, we’ll examine how this data is mis-used to answer the question do open houses work?

While many agents aren’t particularly excited to host Open Houses, it’s hard to ignore the significant role that they play. But quantifying this role has been tricky. For example, there is no research that directly answers the question: What Percentage of Homes Sell from an Open House.

We’ll unpack this question at great detail below but we’ll also go over the related data on home buying specifically when it comes to visiting Open Houses. Then we’ll make a best guess as to the percentage home sales where an Open House was a factor. Here’s what’s on the docket:

• Fact: Buyers attend Open Houses
• Debunking Popular Open House Stats
• Approximately what Percentage of Homes Sell from an Open House?
• What Impact will the NAR Settlement have on Home Sales from Open Houses?

Buyers attend Open Houses

Fact: home buyers attend Open Houses.

In the National Association of Realtors (NAR) annual home buyer trends survey they report that 50% of buyers attended open houses during their home search.

If that sounds high it’s because for years, there have been misleading stats on Open Houses that have been used to downplay their importance.

Misrepresented Open House Stats

In trying to understand What Percentage of Homes Sell from an Open House? we should look at the most repeated stat on Open Houses and also dig into the nature of this data.

It’s a widely touted stat (just search for Open Houses on any Real Estate Facebook group) that fewer than 5% of buyers found their home through an open house. In the most recent NAR home buying trends survey they show that 3% of buyers visited open houses as their initial step in the home shopping process.

That doesn’t make a compelling case for Open Houses does it?

But wait. In this survey, the Internet, real estate agents, and friends account for 80% of the results, with the online research (of some kind) representing over half!

This reveals a flaw in the conclusions drawn from these results. How would a buyer even find an Open House without using one of these other sources? Sounds improbable…which explains the 3% number.

However there is one way, as a separate NAR survey reported 4% of buyers found their home via a yard sign or Open House sign. Yes we’re talking about randomly seeing an Open House sign while driving and then purchasing the property. It’s actually hilarious to think that any serious buyer would purchase property this way.

It’s important to remember that Open Houses aren’t intended to be the first step in a home search or a way for a property to be initially discovered by a buyer. Instead, they allow buyers an opportunity to visit and evaluate a property. Therefore, comparing Open Houses with the Internet in terms of property discovery is an apples-to-oranges comparison.

However, as noted above, the same NAR survey does provide some clarity on the role Open Houses play: 50% of buyers mentioned attending open houses during their home search.

Approximately what Percentage of Homes Sell from an Open House?

Before we put on our guestimation hats, we gotta ask two philosophical questions:

• What does it mean to “sell” something?
• When there are multiple points of consumer interaction in a sale, what interaction gets credit for the sale?

Well marketers and sales people have been trying to answer this question for decades…and sadly, the answer is that “it depends”.

Here’s one way to think of the sales journey for Open Houses.

The age old debate is deciding the interaction that gets credit for the sale. Many marketers have given up on this altogether and just decided to evenly assign attribution across each touchpoint along the way to a purchase. Some marketers have developed complex attribution algorithms to decide how to split up the credit of a sale.

Anyhow, this is why the question “What Percentage of Homes Sell from an Open House?” isn’t so easily answered…but how about we put a range on it.

We know that 50% of buyers attended Open Houses but we don’t know if the Open House(s) they attended were for the actual property they ended up purchasing. So we at least know that the percentage of homes that sell from an Open House doesn’t exceed 50%, but let’s try and get a more precise number…

Going back into the same NAR Survey from above, buyer respondents said they viewed 7 properties on average before purchasing.

And since we’re firmly in guestimation territory, let’s incorporate some data from an older Zillow post stating that home buyers attended 2.6 Open Houses before buying.

So we can then apply the 2.6 Open Houses to the 7 properties…which gives us an approximate answer to the question What Percentage of Homes Sell from an Open House?

Approximately 37% of buyers attended an Open House for the property that they eventually purchased…meaning that the Open House played a role in the eventual sale. Keep in mind we don’t know how much of a factor the Open House played AND ALSO mixing survey data like this is usually frowned upon by statisticians.

However, we think it’s a reasonable assessment into the overall importance of Open Houses during the home buying process.

What Impact will the NAR Settlement have on Home Sales from Open Houses?

Now we’re stepping out of guestimation territory to enter crystal ball territory. But with the NAR Settlement, buyers will need to sign an agreement with a buyer’s agent in order to go to showings (as we’ve detailed in this post Showings vs Open Houses Post Settlement). These agreements may intimidate many buyers especially since they will likely detail compensation to be paid to the buyer’s agent.

The result is that some buyers will go to Open Houses instead of showings which will result in:

• an increase to the 50% of buyers that NAR reported visiting Open Houses as part of their purchase process
• an increase to the 2.6 average number of Open Houses reported by Zillow
• an increase to our 37% guestimate of the Percentage of Homes that Sell from an Open House

If you want to maximize your Open House prospecting in anticipation of these shifts in buyer behavior, check out Curb Hero’s free digital Open House sign-in.