Ethics and Open houses
Open houses can be a great tool for REALTORS. In a very active market, an open house can compress the time on market and allow the house to sell more quickly. They can demonstrate to the sellers that you are doing everything you can to market their home effectively, and to the right buyers. They can be a great lead generation tool. Unfortunately, open houses can create opportunities for ethical dilemmas to arise. Avoid common mistakes agents make when planning and holding open houses and stay on the right side of the Code of Ethics.
Pitching open houses to your sellers
When presenting the idea of an open house to your sellers, be open with them. Many people are aware that open houses are more often a way for agents to fill their pipelines than a realistic way to market the home to a potential buyer. Acknowledge that you may garner some leads from the open house, but that it is not your primary goal. Display signs on the property explaining your fiduciary responsibility to the sellers to underscore that point (you can place these near the sign in sheets.) Explain to your seller how your open house will actually be productive for them. Have a plan in place to attract buyers who are looking for homes similar to their listing (as in using reverse prospecting, or holding an even open house if the listing is particularly unique). Let them know that the more marketing you do to draw attention to the listing, the more likely you are to get a buyer for their property.
Avoiding sending mixed signals to buyers
When you’re holding a house open, you want to appear friendly an approachable to buyers. You want to encourage their business. You may answer certain questions. You may provide the sellers’ disclosure, and discuss facts about the house. Do not discuss personal matters about the sellers or their motivations for the sale. Make certain that the buyer understands that your responsibility is to the seller. If a buyer is very interested in the property, you must reiterate that you represent the seller and explain dual agency to the buyer. Most buyers may not understand the concept or why they might want their own representation. You need to be clear from the outset to avoid problems down the road.
Answering the questions from the “experts”
Search online for “questions to ask at an open house” and the maddening results will explain a lot. So here are some of the most common questions the “experts” recommend buyers ask. Be prepared. If you haven’t heard them already, you will.
How many offers have been made? You don’t have to answer this, nor should you unless you have the permission of your clients to do so. It’s ok to say that.
How stable has the price been? If there has been a price reduction, say so. They probably already know anyway.
Why do the sellers want to move? This one is a bit tricky. You don’t want to go into detail because of the privacy of your clients. Discuss beforehand with the sellers what they are comfortable disclosing. Most often, it’s best just to say that it’s a good time to take advantage of the equity they have built up in the home to move on to the next phase in their lives.
How long has this property been on the market? In an active market, most of the time this isn’t really going to be a problem. If the house has lingered, there’s going to be an explanation, and usually a pretty easy one: either a previous contract fell out or the house needs renovating and it’s not the kind of thing everyone is prepared to take on. It’s ok to say so.
What issues does the house come with? (and) When was the house last updated? Why, thank you for asking. Here’s the sellers’ disclosure.
How much do utilities cost? This one is kind of arbitrary. One family’s usage won’t necessarily reflect the usage of another family, even in the same house. You can provide average costs, but it might not have anything in common with what the next owner will experience. Make sure they understand that.
What’s the seller’s timeline? Make your best offer and we can discuss that.
What are the neighbors like? This can be a loaded question. If they mean what kind of amenities the neighborhood has, that’s one thing. If they mean who lives there, that’s another thing entirely. Sidestep the latter by saying that demographic information is available online, and that federal fair housing guidelines prevent you from discussing any specifics. If they press, steer the conversation back to the details of the house itself.
Is the home located in a flood zone? We’re not privy to that information as REALTORS, but they can check FEMA’s website, and it should come up in the title search if it is.
Are there any known sex offenders/criminals living in proximity to the home? Check with the local police.