With the California Department of Public Health allowing open houses now, it would seem that we are getting back to normal. The industry has done open houses for 100 years, so taking a few months off shouldn’t inhibit the practice from coming back.
Or will it? It will.
Why? Because the covid-frenzy has condensed the selling process into a weekend. We only show homes by appointment now, and many listing agents demand that buyers show proof of ability to purchase just to see the home. It makes for a clean and tidy 5-30 qualified appointments over the first couple of days on the market, and then pick a winner. Job over.
Listing agents will resist having to work any harder. Instead, they will adopt the appointment-only plan, and then convince sellers that they don’t want random people wandering around their house.
What are the benefits of open houses? Why would we want them to come back?
REASONS TO HAVE OPEN HOUSES
The main reason to do open houses is to create real or imagined urgency – the fear of missing out. There is nothing better to motivate a buyer than to see other competitors roaming around the house at the same time – it makes them think that they will lose out if they don’t act promptly. Sellers deserve this benefit.
While demanding to show proof of ability-to-buy sounds good, it eliminates those legitimate buyers who do have the ability to purchase, but don’t want to show their financials just to see a house. We want to include these buyers who are currently shut out from the process. I know there will be agents who will scoff and declare that any buyer who is unwilling to show their underwear just to see a house isn’t a serious buyer anyway. But it’s just an excuse – the minute the frenzy is over, you’ll be back to showing homes to anyone with a pulse.
Interacting with buyers in person helps agents keep their chops up.
C.A.R. will be releasing more open-house guidance tomorrow. They will insist on booties and masks, and they might include a modified registration book where attendees state that they don’t have covid.
But don’t be surprised if agents are slow to adopt the old-fashioned open house techniques.
They are happy to buy your house for the amount of their zestimate, which in this fast-moving market can only mean that sellers are leaving money on the table – it’s just a matter of how much. But sellers – who have been cocooning more than ever – may not have a feel for the real estate business or the differences between agents and who just want quick cash will likely jump at their offer to purchase.
Zillow has opened up as a brokerage as well.
They are masterful at blurring the distinction too, because they are still very dependent upon realtors spending billions to advertise on Zillow. But check out their latest video that encourages home sellers to call Zillow, and if it weren’t for the broker ID at the 0:33-minute mark (for three seconds), a viewer would think that this sale was handled by a Zillow agent.
Commercials like these are building their brand as the go-to destination for home sales.
It will just be a matter of time before they replace their partner agents with their own licensed employees to process your paperwork.
It’s getting to the point where it is so competitive that buyers will be tempted to make offers without contingencies to improve their chances of winning. But let’s face it, they would do so reluctantly.
Sellers should be very cautious about taking an offer with no contingencies.
You will be making a deal that would have maximum buyer’s remorse. If the buyers change their mind, and they insist on fighting for the deposit, it will tie up the property so you can’t sell it to anyone else.
Are you going to chase them around for 6-12 months to try to get their deposit and risk missing the peak – and screw up your plans for moving too?
We have another disrupter who is providing a service you didn’t know you needed until now.
Traditionally, a buyer’s agent accompanies their clients to show them the homes for sale, and to give expert advice about each house while on site. But other real estate companies – who don’t appreciate that valuable service – have dumbed it down by just paying door-openers that allow buyers into the house, but leave them on their own to figure out the rest.
A new company has taken it one step further, and is providing an Uber-like service where random agents can get paid for opening doors for other agents.
The company charges $39, and pays $24 of it to the door-opening agent – who agrees to not offer advice to the buyers, and to direct them back to the agent who paid the $39 showing fee.
Spence has gotten involved with Offerpad, joining the other disrupters who lead with lies and insults about traditional realtors.
He said, “The real competition for Offerpad isn’t Zillow or Opendoor, it’s the fact that 99.5% of the time people sell their home the old analog way.”
But at the same time, these consumers are also relying more and more on services like Uber, Instacart and Amazon. “They’ve become conditioned to wanting an ease of use,” Rascoff said. “They’ve been conditioned to pressing a button on their phone and having some magic happen.”
His magic costs 7.5%.
They don’t mention their percentage, but even analog people have a calculator handy. To offset, they pack their Traditional Offer with concessions and costs that add up to 9%, which makes theirs look like a deal.
But the worst part for any seller who makes their home-selling decision based on the cost is that they assume that everyone will sell the home for the same price. Offerpad will try to convince you that their ‘team of real estate experts’ will pay the full retail value for your home, and then hit you with the testimonials:
Will consumers go for it?
Will people ignore the math, not speak to a traditional realtor, and not know the real value of their home – and instead just press the button to have some magic happen?
P.S. They aren’t the only ones using that photo, though not sure who went first:
I have honored four legends in these pages – my Dad, Doug Harwood, Gary Thompson, and John Wagner. Today we add a fifth.
Peter Buehrle, affectionately know to all of us as Peter B, passed away on Sunday.
He was gregarious and good natured, always bringing levity to every situation. An accomplished realtor (he sold over 1,200 homes) and a committed golfer, he had friends everywhere he went. The last time I saw Peter in person, I was standing on the curb when he drove up in his car. As we chatted it up, I noticed that he had a real estate training CD on the passenger seat. When I pointed it out, he said, “Hoping to learn something new every day, and do better for my people”.
Kayla and his son Houston were in the same class at CCHS, then he went on to graduate from USC. Houston then became one of the greatest successes to ever come out of Cathedral when he started his own company and landed on Orpah’s Favorite Things List in 2018. Here’s his story:
Thanks to the readers who sent in the recent WSJ article that mentioned that the national inventory is so bleak that there are more realtors than homes for sale (1.04 million homes vs 1.45 million realtors).
Let’s check the local productivity.
The graph above shows 29,600 real estate professional in San Diego County. (SDAR states that they have 20,000 members, NSDCAR says they have 6,000 members, and there is the PSAR which doesn’t have their member count on their website).
Last month we had 2,680 homes sold, including all property types – such as condos and mobile homes.
It means that 90% of the realtors in San Diego didn’t sell a home last month – in the hottest February ever.
To provide some transparency on the deal-making on the street, here’s a review of properties that have gone pending this week. I didn’t intend to make a blog post out of it, but I had inquired about the availability of these listings, and for my own knowledge I like to ask how many offers the listings agents have received.
They had FIVE OFFERS on 1833 Willowhaven, and another similar home that listed on the same side of the street for $1,299,000 also had multiple offers. A good example of how a few more listings in the lower price ranges should all get picked up.
They had EIGHTEEN OFFERS on this one, because it checks most of the boxes. Well-priced single-level with nice private yard that’s been tastefully renovated. The 17 other buyers will be battling it out for months on these! I commend the listing agents for providing enough access to accommodate that many people and offers.
