As a Real Estate Agent, you may have found yourself asking the questions: Should I Hold An Open House? and Should I Take This Listing? Most real estate agents come up against this dilemma from time to time. On one hand having an open house is a way of getting business and getting paid on one or both ends of the transaction. On the other hand, is hosting the open house a good use of your time? Whenever my clients ask me about this question I always open my response to them with: “Location, Location, Location!”
What Does Location, Location, Location Have To Do With A Home Listing?
In any condition of the real estate market there seems to be a temptation of real estate agents to do things for the hopes of getting something out of some activity when there could be far more efficient things to do to generate business. For example, one activity is holding an open house or not. The following are three things to consider when determining whether or not you should hold an open house, or even taking a listing. If you fit two of the three considerations below then you probably should have the open house - and even take the listing.
Listing A Home - Consideration 1 - The Two Turn Rule
The Two Turn Rule defines the first Location from the phrase above. If you are considering whether or not to do an open house the first thing you want to look at is whether the home is two turns from any main street. If your open house is farther than that from a main road, you get too deep into a subdivision and potential buyers get lost driving around. In many cases, potential home buyers driving around your neighborhood end up not getting to your home in this situation as they end up looking and stopping at other people’s open house yard signs first; the ones that are closer to the main road.
Listing a Home – Consideration 2 – Potential Buyer Density
You have to consider Potential Buyer Density. What is the Potential Buyer Density? The Potential Buyer Density (PBD) is comprised of two groups: renters in your neighborhood and smaller square footage home owners in your neighborhood.
- Let’s examine the renters in your neighborhood. Home many non-owner occupied homes are there in the neighborhood? How many of these homes are rented? Rented homes are incredible opportunities to pick up home buyers.
When you look at renters in your neighborhood you want to consider homes that are as big as your open house home or smaller when it comes to square footage. Chances are, as a renter they are matched up to the home size that they want, or if the rental is smaller the renter might be willing to move up into their home own if your home is slightly bigger.
- Now for the home owners who own a smaller home than yours. The homeowners in this group are people who probably have thought quite a bit about upgrading to a slightly bigger home. Perhaps these folks want to upgrade for extra garage space, an extra bedroom, or they want an extra room to be used a game room. It also helps to target market to owners who have lived in their homes for at least 2 or more years and have homes that are approximately 500 square feet smaller than your own.
It is important to target these home owners as they may well want to upgrade, but do not want to move out of their school district and have the kids change schools. It is a big worry for parents and families to not have to move their children away from where they have been going to school.
Now that you have targeted these two groups of homes you will want to count all of the households that fit these categories. The magic number you are looking for; the Potential Buyer Density – is 100. You want at least 100 homes in your neighborhood to match these two criteria or you might not get the results that you are looking for with your open house if you decide to have one.
Listing A Home – Consideration 3 – Active And Pending Listings and Homes Sold
The third part of our “location” equation is Active Listings, Pending Listings, and Homes Sold. This information comes straight from your MLS. How many active sales, pending sales and recently sold homes are in the neighborhood currently and over the last few months? If you have a lot of listings in your neighborhood, but few pending or closed sales, the neighborhood isn't moving. People aren't interested in buying that home. Perhaps you should move on.
Marketing Strategies When Listing A Home
How do we market this neighborhood and is it marketable? To have a chance with any particular home in any particular neighborhood you will want to make sure that you have favorable responses to at least 2 of the 3 considerations from above. Obviously 3 is better than 2. But don’t take the listing or don’t hold the open house if you are only meeting 1 of the considerations from above. With this said, the following are some brief thought about marketing strategies taking into account each consideration.
- With the first location rule, you are talking about 2 Turn Rule. To respond to this rule you will have to spend a considerable amount of time with external marketing to get traffic coming from the outside.
- The second location, Potential Buyer Density is internal neighborhood marketing; those hundred homes that have renters or owners who live in smaller homes. You will have to target these homes with a mailer, flyer or something else to get their attention.
- The last location tip: is the neighborhood moving? What are the numbers of the Actives, Pendings, and Solds, because if the neighborhood is not active, don't try to change it, just accept it and move on to another home and neighborhood – you don’t have to try to be the hero. If the neighborhood is active then you will not have to do much marketing other than working with your MLS other agents and using Internet Marketing Services like PropertyNut.com or Trulia.com for example.
Article Submitted by Dean Naughton, Real Estate and Mortgage Sales Trainer and CEO of Sales Evolution, LLC. Dean has been in the real estate and mortgage industries since 1992. You can reach Dean direct at his email address of Dean (AT) SalesEV.com or his website: SalesEV.com.
