Open Houses are Not the Way to find a Home
By Claudia Lewis
Open Houses are Fun but not a Good Idea
For may folks, open houses are a fun way to spend a weekend afternoon. It's interesting to see what your neighbor’s house looks like and possibly pick up some good decorating ideas. On the other hand, open houses are NOT a good way to buy a home. With all the information currently available on the internet, open houses are an entirely unnecessary way to look at homes for sale. Open houses are, in fact, responsible for selling only a tiny percentage of homes for sale.
If that’s the case, why do open houses remain such a ubiquitous fixture in the real estate market? The answer is simple. Open houses are a great way for real estate 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?
The Unrepresented Buyer
Potential buyers who walk into an open house unrepresented can place themselves in a precarious position. When they give personal information to an agent at an open house, home buyers can jeopardize their ability to pick the agent of their choice. Worse, a buyer could find himself owing a commission to more than one agent. Though not quite as clear cut, the same can happen when buyers request information about a property through an agent’s web site.
Procuring cause is a rule spelled out in the National Association of Realtors Code of Ethics. The rule is meant to block agents from stealing a deal away from another agent already working with a prospective home buyer. A real estate agent can have a valid procuring cause claim if they were the first one to introduce a buyer to a home. If that agent met the buyer at an open house, and that buyer purchased the property through another agent, the listing agent could claim procuring cause. 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. If all brokers worked as hard for a random buyer as they will for contracted clients this approach might make sense. What happens when two or more 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. Here’s how. To begin, 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.
Look for an agent who tries to help you think through basic issues at your first meeting. If they are organized, knowledgeable and focused, with a concrete plan of action, they can probably help you a lot. Next, carefully review a copy of their buyer agency agreement, with an attorney's help if you need it. When you feel entirely comfortable with the terms and the agent, sign a short-term agreement and get started.
Take Your Agent with You
Your agent can take you to any open houses you want to see, or better yet, arrange for a private showing of any home on the market. A good agent can show you a property 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. Best of all, your chances of finding the home that’s right for you are high. Happy hunting!