Open Houses: Just For Suckers

December 6th, 2007 The New Real Estate Agent Trap 5 Comments »

I’ve defended Open Houses for a while now, but I’ve swung about to Jonathan Dalton’s point of view on this one. (Enjoy your victory Jonathan.)

Open Houses are terrible at selling homes. That’s why established agents take the day off and get newbie agents to do their open houses for them.

It just seems to be a straight math problem. I think NAR figures had 4% of all homes sold from open houses. If each house had 3-4 open house events, then it seems like any individual open house has around 1% shot at a sale.

So as an agent hoping to actually sell the house, I’d in theory need to do an open house every week for almost two full years to get up to a 100% shot of selling a single house.

Each open house takes about 5 hours with printing up flyers, driving out there, plonking down signs, standing around in the open house, collecting signs and driving back home. So 5 hours x 100 open houses = 500 hours to get one sale. Do the mental math for the standard commission in your area divided by 500 hours and then pour yourself a stiff drink. For me it pays less than minimum wage and more than if I was in prison. Though prison comes with health benefits, so it’s kind of a wash.

Meanwhile actual showings probably have a 5-10% conversion ratio to actual offers on the house. 

Open Houses are held to shut the seller up, and to have the agent try and pick up buyers for other houses. End of story. This is specially true if another agent is covering the open house for the listing agent. There is a mere 1% shot at a hope to get a buyer for the house, and there is at least half a chance the buyer already has an agent. In that case, even if it sells from the open house, the newbie agent covering in won’t see a dime from the transaction.

Admitting that the only real reason to waste a Sunday doing an open house is to try and snap up some new buyers - the other issue is that usually next to no people actually show up to open houses without heavily investing in marketing of the open house. Those postcards, mailers and newspaper ads etc all ad up. The question is whether or not advertising dollars spent this way are as good as attracting buyers as advertising dollars spent in other ways. Farming cards, painting your car like a billboard, slipping business cards in your kids lunchbox to give to friends at school etc.

Personally I think it doesn’t add up to a good investment of time and money anymore.

Hope you got gas money from the listing agent.

Welcome to The New Real Estate Agent Trap.

Lame-O Opportunity Time

October 10th, 2007 The New Real Estate Agent Trap 4 Comments »

It’s called all manner of things…

…Floor Time, Opportunity Time, or more more simply put… “Phones”.

If I couldn’t chew through the days RSS feeds while on Fluffy Bunnies “Phones” I would have gone postal during this scam long ago.

Here’s the deal…

Supposedly the general public are like lost lambs needing real estate services, and they just might call the office while you’re minding the phones. They might have a big juicy commission for you should they both need to buy and sell a house. If they call – you’re their guy! Wow I like the sound of that.

But here’s how the calls break down…

25% for the office Top Producer.

25% for the office manager.

25% booking showing appointments

24% are for other agents, which you put into voice mail because no one is in the office except you, the Top Producer and the office manager.

That leaves just 1% of the calls for you as hot leads!

But…

The newspaper advertising all has the listing agents name in the ad and their phone number. The Internet advertising all has the listing agents name and phone number on the ad. The yard sign has a sign rider with the listing agents name and number on it. Any direct mail the listing agent sends out has the listing agents name and phone number all over it.

So serious potential buyers just call the listing agent, not the current chimp manning the phones. Remember how you put the call through to the Top Producer? Put them into the other agents voice mail? Ever wonder what those calls were about?

Anyway you still have that 1% to work with. Here’s how that breaks down.

0.25% are calling 3–4 brokerages to get a free CMA to know what to price their house at for when they go FSBO.

0.25% are driving around lost and call the office number on the sign. They don’t know where they are, and they want to know how to get back to Route 6 from where ever they are. The house they are outside of is white.

0.25% already have an agent, but their agent doesn’t return calls fast enough, so they figured they would just call you up and pump you for information on a property.

0.25% Don’t even have an email address. These people will require multiple snail mailings of listings and then fire you because you don’t communicate well enough about what’s on the market right now.

Which leaves… 0% of incoming calls as good leads.

Hope you aren’t playing receptionist for free.

Welcome to The New Real Estate Agent Trap.