Why I Like Neighbors -- Reason #37

"Nosy Neighbor?" Try, Best Ally

At least to some Realtors, neighbors are time-wasters and tire kickers.

They come through open houses not to buy, but to see how their Kitchen compares with their neighbor's, to get interior decorating ideas, or to see what their own home is likely worth.

All (occasionally) true, but neighbors can also be the best salespeople for their block -- who better to field a question about local schools, kids on the block, nearby shopping, etc.: the next-door-neighbor . . . or the Realtor trying to collect a commission?

Neighbors at open houses know who they are -- but prospective Buyers typically don't.

All they know is that the house that they may be interested in buying is full of lots of other prospective Buyers, too.

Free Recruiting

It's also the case that neighbors recruit their friends to move nearby.

Holding an open yesterday in Golden Valley, the next-door-neighbor came over to tell me that she was hosting a party for her son's football team later that afternoon.

If I gave her a stack of marketing flyers, she was happy to set them out where her house full of guests would see them.

I did . . . and she did.

Counting Open House Traffic

"Party of Five" -- Or Twelve

If a dozen people came through your Realtor's Sunday open house, would that qualify as good traffic?

It all depends.

If the 12 people were the couple contemplating buying, 4 of their friends, 2 siblings, and both sets of parents . . . I'd say, "no," not really (and yes, I actually had such a group come through one of my open houses once).

On the other hand, if twelve individual Buyers came through, that would qualify as good traffic.

Which is why Realtors will typically quantify open house traffic in terms of number of discrete parties through -- not number of bodies.

Open House Traffic Report

Motivated Buyers

In my post, "Labor Day Weekend Traffic," I offered up the (Realtor) conventional wisdom about open houses during holiday weekends and other traditionally slow periods.

Namely, that such open houses often make up in quality what they lack in quantity.

So who came through my Golden Valley open house today?

--A "downsizer" who closes on the sale of their Minnetonka home at the end of September, and needs a place ASAP;

--A prospective Buyer who just relocated to the Twin Cities from Atlanta.

--A renter whose lease is up Sept. 30.

Good prospects, all!

Labor Day Weekend Traffic

Quality over Quantity

The (Realtor) conventional wisdom on holiday weekends, like the one coming up?

That it's a microcosm of the slower, Thanksgiving-to-New Year's period.

Namely, while there is a noticeable drop in traffic, the Buyers out there tend to be more serious and motivated.

Call it "quality over quantity."

Practically, with all the real estate offices closed on Monday and people off work, it'll be tough to request and get confirmed showings (although nothing prevents you from requesting a Monday showing on Saturday or Sunday).

Why I Call My Front Desk at 2:45 p.m Sunday

Gauging Open House Traffic

I don't know about other Realtors, but whenever I host a Sunday open house (I've been doing Sat./Sun. double-headers lately), I like to call my front desk to find out how busy it's been.

So, I try to check in around 2:45 p.m., before my front desk closes at 3 p.m.

Here's how I'd characterize the possibilities, from most to least busy:

"Jumping"

"Busy"

"Steady"

"Slow"

"Dead"

For the record, yesterday's activity was somewhere between "Slow" and "Dead" -- about par for a hot, late Summer day.

Which is still important to know, because it's one more piece of information about how the market perceives your client's property.

Establishing a Baseline

Obviously, the best combination is to have non-stop traffic on an otherwise slow day.

And any one open house hardly makes for a statistically valid sample. (First open's typically draw disproportionate, "neighbor-heavy" crowds; ditto for an open house after a long interval without.)

However, if your open houses are consistently moribund when it's busy elsewhere, it's a (loud) signal that something needs addressing.

If the home has been well-staged, photographed, networked, and marketed . . . that "something" is often price.

P.S.: And no, that's not the City Lakes' front desk pictured above -- it's a stock photo I found online.

Gauging Sunday Open House Traffic

The Sunday Times vs. Crossword Puzzles

No, the picture (at right) wasn't the line to get into my (first) Sunday open house at 2700 Chowen Ave. South last weekend.

But it felt like it.

Unlike most Realtors, I am not a stickler for sign-in sheets, or otherwise "taking attendance" at open houses I host.

That's because, in my experience, if you force people to leave contact information, they will -- it just might not be correct.

It's also the case that people who want to be in touch with you, will; if they have a sincere interest in the home you're selling, the area, or have a real estate-related question, they'll naturally exchange contact info with you.

So how do I gauge Sunday open house traffic?

By how many sections of the Sunday New York Times I get through during the two hour open (I have it along for any lulls; I'm not into crossword puzzles).

At Chowen last Sunday, I barely read two paragraphs from one Op-Ed piece.

Real Estate Myth #37: Sunday Open Houses

"Open House Available For a Terrific Listing That Always Gets Great Traffic"

One of the more durable myths out there is why Realtors do Sunday open houses: many clients (and prospective clients) seem to believe that the primary motivation isn't to sell the client's home, but for the hosting Realtor to troll for future business and ultimately sell other homes, down the road.

The reality is a bit different.

If Sunday open houses were such a great way to pick up clients, you'd see more listing agents doing them.

In fact, the majority of listing agents avoid doing them.

Instead, they try to line up replacements -- typically, newbie Realtors -- by dangling carrots like this: 'Open house available this Sunday for a terrific listing that always gets great traffic.'

Just once I'd like to see a listing agent level with would-be pinch hitters with a hook like this: 'open house available this Sunday for a not-so-appealing home in an out-of-the way location that's already been for sale for 8 months, is (still) priced above market, and may get 3-4 people through -- if you're lucky.'

Notoriously Low Yield

What the (experienced) listing agents know that the newbie's don't is the following:

--Most people coming through open houses aren't interested in buying a home at all.

They're just curious about what the home looks like inside; are interested in interior decorating ideas; want to see what prevailing home prices are so they know how much their home is worth. Etc., etc.

--The distinct minority of prospective Buyers who are serious are invariably already working with a Realtor. Which means they're strictly off-limits.

--The remainder of Sunday open house prospects -- people who maybe, kind-of are looking -- usually are characterized by one (or more) of the following: a) they can't afford the house (or any house); their timetable is next year (or century); they have no idea what they're looking for, at what price range, or where.

So, yes, a new Realtor who has time on their hands and plenty of patience is welcome to follow up with such prospects -- assuming they leave valid contact info -- in the hopes they'll eventually buy something.

Or not.

The Case for Open Houses

All of which begs the obvious question: if open houses have such a poor track record, why do them at all?

For two reasons:

One. As a convenience to serious, already-represented Buyers, who are typically off work on Sunday afternoon and can cover more ground going through open's (vs. having their agents set up private showings during the week).

Two. Because, while the odds may be low . . . you never know. (See, "The (Mythical?) Serendipitous Buyer").

In truth, the vast majority of things Realtors do to market homes -- at least individually -- have a low probability of success.

So, the odds of a private showing leading to a consummated transaction are less than 10%; the odds of exposure at a Broker Open (Tuesdays) leading to a sale perhaps only a little better.

Ditto for blast emails to neighborhood Realtors; direct mailings; high-end photography and literature; "plugging" listings at various Realtor meetings, etc.

But therein lies the rub.

Precisely because you don't know which marketing effort will ultimately sell your client's home . . . a good Realtor does all of them.

P.S.: the foregoing recalls the marketing director of a Fortune 500 company who laments that she knows she's she's wasting half her marketing budget -- she just doesn't know which half.

Open Houses at Odd Hours

"Open Thursday From 5 p.m to 7 p.m"

Most Realtors hold open houses on weekend afternoons.

In fact, I'd guess that more than half of all open houses are from 1 p.m. to 3 p.m. on Sundays (Vikings games in Fall excepted).

There's certainly logic to that: that's when most people are off work, and free to go house shopping.

And once there's a default time, it becomes self-reinforcing, because everyone wants to "piggyback" off the traffic being generated by the other open houses.

However, there's a case to be made for changing that up, at least occasionally.

I heard a story just this week about a Realtor who held an open house on a Thursday evening -- and got a Buyer!

The back story is, the Buyer has a lake cabin they go to every weekend -- no Sunday open houses -- and just happened to see the open house sign.

Gauging Sunday Open Traffic

Actions Speak Louder Than Words

What does a Realtor with some spare time in a new city do on a Sunday afternoon?

Check out some open houses!

In fact, I just had time to go through a few, but here are a couple stray observations:

--The Southwestern equivalent to the Midwestern "ranch" or "rambler" is a "villa-style" one story (Spanish architecture, tile roof, open floor plan, lots of patio's and sliding doors, etc.).

However, with no basement or upper level, a Scottsdale home (pictured above) with 4,000 finished square feet actually has a foundation size of . . . . 4,000 square feet!

By contrast, in the Midwest, a typical 4,000 square foot home would be a two-story, with perhaps a 1,700 square foot foundation.

The much more vertical floor plan would then typically have about 800 FSF in the lower level, 1,700 on the main, and the remaining 1,500 up.

--How do you tell if the agent hosting the open is accurately reporting traffic?

Put it this way: if the open is advertised as 2 p.m. to 4 p.m., and you arrive at 3:40 p.m. to find the Realtor hitting all the lights . . . it wasn't great, no matter what they say.

That's especially the case if they don't appear to be especially stressed or rushing somewhere -- in other words, you can rule out an emergency for their having to leave early.

Weather (& Buyer Traffic) Patterns

The Car Wash Model

No, it's not good for showings, or broker and Sunday open house traffic, when the weather is especially frigid, or a snowstorm temporarily shuts things down. In other words . . . today (at least in the Twin Cities).

But experienced Realtors know that it doesn't really matter, for two reasons:

One. It all averages out.

Two. Concentrated activity is better than diffuse activity.

What do I mean by that?

If 20 people are going to come through my open house, my druthers would be for them to all show up at the same time.

That way, there's a buzz, and buzz heightens interest. Heightened interest, of course . . . . leads to offers!

Think of it as the "car wash" model: the longer the cold snap, the longer the line of cars -- er, prospective buyers -- when there's a thaw.

P.S.: the same principle helps explain why FSBO's sell their homes for much less than Realtors do (statistics suggest about 15%). Instead of "collecting" prospects' names and concentrating interest ahead of their market debut, they deal with them one at a time, diffusing interest.

Building prospect awareness and anticipation is precisely why good Realtors spend a lot of time and energy promoting their "pre-lists."