Open House Dos and Don’ts
By Claudia Lewis
Open Houses are a fun way to spend a weekend afternoon, seeing what your neighbor’s house looks like or picking up some good decorating ideas. What they are NOT good for is buying or selling a home. With all the information currently available on the internet, open houses are entirely unnecessary in the digital age, and are, in fact, responsible for selling only a small percentage of listings.
If that’s the case, why do open houses remain such a ubiquitous fixture in the real estate market? The answer is simple. Because they are a great way for agents to snare unrepresented buyers. Agents hold open houses, not to sell their listings, but as a prospecting opportunity, a way to fill their pipeline with future business. Do you really want to be caught up in the net of a hungry agent angling for clients?
Walking into an open house unrepresented can place potential buyers in a precarious position when it comes to representation. Home buyers can jeopardize their ability to pick the agent of their choice in a real estate transaction when they give personal information to an agent at an open house or request information about a property through an agent’s web site.
Procuring cause, spelled out in the National Association of Realtors Code of Ethics, is meant to block agents from stealing a deal away from another agent already working with a prospective home buyer. Therefore, a real estate agent could have a valid procuring cause claim if they were the first one to introduce a buyer to a home, say, at an open house, that the buyer later purchased through another agent. While it’s a rare occurrence, procuring cause disagreements could put a buyer in the position of having to pay two buyer agent commissions.
Some prospective home buyers tell every agent at every open house what they are looking for and ask them to call if something comes up. This might be a good strategy if all brokers didn't have access to all the same listings, or if brokers put the same effort into researching properties for a random buyer as they do for clients who are contractually committed to working with them. And what happens in the possible scenario where two or more of those agents contact you about the same listing on the same day? Who is the procuring cause? This is a risky approach.
Finding YOUR Agent
Many home buyers, especially first-time buyers, hesitate to commit to a single broker because they have no idea how to find a good agent they are comfortable working with. Here’s how. To begin a focused home search, set up meetings with two or three brokers who have been recommended by friends or co-workers. Some agents focus on selling listings, so make sure the agents you interview have lots of experience working with buyers. Tell them what you can about your situation, even if you're unsure about whether or not you should buy a house in the first place. Watch and listen to what they say. If they seem to be trying to help you think through basic issues at this first meeting, if are organized, knowledgeable and focused, and if they have a plan of action that is concrete and sensible, they can probably help you a lot. Pick someone who has their act together and who you're comfortable with. Get a copy of their buyer agency agreement and review it carefully, with an attorney's help if you need it. And then sign a short-term agreement and get started.
Take Your Agent with You
Your agent can go with you to all the open houses you want to see, and better yet, they can arrange for a private showing of any home on the market on the day it becomes available, so you can beat the rush. That’s the smart way to buy a home. If you work with good people and take reasonable precautions, your risks of getting burned are low and your chances of finding the home that’s right for you are high. Happy hunting!