With the improved technology and advanced REALTOR® techniques used for updating and communicating with both Sellers and Buyers for showings, open houses are increasingly becoming an obsolete ‘tool of the past’ and for many important reasons are not worth a Seller's risk and liability to allow. In this article, Kelly Grant discusses various components of REALTOR® showings: how they work; top 10 tips on how to keep Buyers and REALTORS® safe during showings; and top 10 reasons why open houses are ill-advised and have become obsolete.
Firstly: how do regular REALTOR® showings work? Below are Kelly Grant's top 10 key points:
(1). Upon listing, the listing REALTOR® (representing the Seller) will compile and forward all property details to the real estate board(s) and MLS™ department.
(2). With the Seller's instruction, the listing REALTOR® will proceed to install an electronic keybox on a Seller’s front door / railing and then register the keybox to track REALTORS® who open the keybox during the listing.
(3). The listing then appears on the MLXchange / Paragon computer system for instant REALTOR® access. It is often the case where tens to hundreds of REALTORS® from all different licensed companies immediately (and throughout the listing) notify many Buyers of a Seller’s new listing so the exposure gained through a REALTOR’S® MLS™ listing is immediate and immense.
(4). Buyer REALTORS® who represent seriously interested Buyers will contact the listing REALTOR® to arrange escorted showings (in privacy, in peace and quiet, with the Seller away from the property, and not in the presence of other Buyers) according to the schedule of the Buyers, Buyers' REALTOR®, and Sellers.
(5). Sellers are advised to handle showings by leaving all lights on (only if home is occupied and not vacant); being as flexible as possible; and to be away from the property during showings so that the Buyers and the Buyers’ REALTOR® can view and discuss the positives and negatives of the property in private. Note that the ‘scheduled showing time’ can vary since REALTORS® may be showing their Buyers a large number of properties (being early or late by a 1/2 hour or more) so usually the ‘scheduled showing time’ is only a rough estimate.
(6). If a property is tenant-occupied, the tenants must be provided minimum 24-hours advance notice for showings in accordance with the Landlord and Tenancies Act. Landlords should make best efforts with their tenants to be fully cooperating with viewings (i.e. being happy when Buyers enter; and leaving during viewings).
(7). Keep loose valuables stored away in private (e.g. locked) places.
(8). If a Seller encounters a Buyer’s REALTOR® or Buyers direct (i.e. situatons in which the full-service listing REALTOR® is not present), and are asked any questions, they should not answer but request that the Buyers or the Buyer’s REALTOR® ask the questions directly to their REALTOR®. The Sellers should then immediately proceed to notify their REALTOR® that these questions were asked. All incoming questions should be carefully considered and discussed between a Seller and listing REALTOR® before properly, correctly, and accurately answering in order to avoid Seller liability and reduced negotiating leverage.
(9). Listing REALTORS® will generally provide detailed feedback to the Sellers based upon what comments the Buyer’s REALTOR® is prepared to provide on behalf of their Buyer.
(10). If a Buyer is interested, they will write an offer through their Buyer’s REALTOR® (which a high majority of the time is a different REALTOR® and / or company than the listing REALTOR® who represents the Seller). After a given number between about 1 to 20 REALTOR® showings, the Seller, through their listing REALTOR®, if all goes well, will generally find out which of the Buyers will pay top dollar for their home!
Next, below are Kelly Grant's top 10 tips to (a). keep a home safe for REALTORS® and Buyers during showings; and (b). to avoid potential Seller liability:
(1). During winter keep sidewalks and patios shoveled, sanded, and free of ice.
(2). Do not over-wax interior floors (slipping hazard).
(3). Always put away dangerous or sharp objects (e.g. kitchen knives).
(4). Keep all animals (most critically dangerous ones) away preferably throughout the listing, and most especially for all showings.
(5). Ensure no exposed electrical ‘live wires’.
(6). Use safety signage if required to guard against potential falling or tripping hazards, etc. where there is potential for someone to get injured during a showing.
(7). Store away any potentially dangerous equipment or machinery.
(8). Ensure any natural gas lines and valves are sealed and capped by a qualified gasfitter or heating contractor (call ATCO Gas for more information).
(9). If you do not have small children, it is possible the Buyers may have small children when viewing your home so it is still important to remove any potential ‘small children hazards’. Regardless, Sellers retain the option to instruct their listing REALTOR® to not allow Buyers to bring children for viewings.
(10). Ask your REALTOR® if you have questions how to safely prepare your home for showings – expect that Buyers and REALTORS® will walk anywhere in and around your entire property.
Finally, below are Kelly Grant's top 10 important reasons why Open Houses are not an effective marketing tool for Sellers; are ill-advised; and should be avoided as a 'home-selling strategy' - all for risk, safety, and liability reasons:
(1). 'Tire-kickers' (i.e. unqualified Buyers) and nosy neighbors dominate the attendees, and most people who attend very often have no idea of the list price, home size, or home features until entering. Presuming these people would be serious Buyers could be compared to ‘winning a lottery’. With restricting to normal REALTOR® showings, the non-serious 'tire kickers' and 'nosy neighbors' who have zero chance of buying would have great difficulty accessing the home.
(2). Open House attendees are not screened with background checks (i.e. to be traceable by police or questioned about health status as per Alberta Health Guidelines for the 2020 COVID-19 crisis) as they would be by Buyer REALTORS® for normal pre-arranged showings. As a result, someone who wants to gain entry for illegal purposes (e.g. meaning to do harm to people or to property either through violence or spreading a virul disease) can easily and quickly do so through an open house (i.e. by simply ringing the doorbell and walking inside) with limited or no REALTOR® ability to trace or scrutinize those who enter.
(3). During Open Houses, Sellers’ belongings are not guarded from damage or theft (only one REALTOR® in the house vs. many people including their children unsupervised throughout various areas of the home simultaneously). With Open Houses, there is a very high risk of property damage or theft, Buyers with potential germs touching handrails, counters, cabinets, etc. In a worst-case scenario, magine the level of potential Seller criminal and civil liability in an unforeseen situation where they allowed an open house, and two groups of Buyers attending at the same time (a). started a fight with each other inside the home in which one of the parties was injured or perhaps killed; (b). started a fire inside the home; or (c). committing sexual assault; etc.? For these scenarios and for many other similar reasons, most insurance policies will refuse to cover (and / or severely limit) Sellers or listing REALTORS® and real estate brokerages from damage caused during Open Houses and liability (lawsuits) between attendees; etc. due to the high amount of risk involved. If many insurance companies refuse to insure all liability with Open Houses, this is a huge red flag why Sellers must never allow Open Houses on their property - PERIOD. Contrary, for normal REALTOR® viewings, there is maximum only one Buyer or group of Buyers in a home at once, and every Buyer step is closely REALTOR®-supervised.
(4). Open Houses are a sign of Seller desperation. Note that a very high percentage of homes that sell at top market value do so without an open house. In Kelly Grant's professional opinion, Sellers will not lose any Buyer exposure or market value whatsoever by refusing to have an open house conducted on their home.
(5). Buyers can receive a 'private open house viewing' anytime simply by calling their REALTOR® or the listing REALTOR® (i.e. if not represented). With open houses, this is not the case where potentially competing Buyers are walking together in groups through a home, hearing what each are saying, and Sellers' relatives could also be at the open house spying on Buyers without their knowledge, and therefore Open House Buyers may often have limited or no privacy. General note: if there are video cameras and / or with microphones installed in the home, Sellers are advised to disclose this through their listing REALTOR® in advance so that Buyers would be made aware prior to entering the home that their privacy of movements and conversations is being compromised while viewing the home. Not providing this disclosure (depending upon the circumstances) could potentially open up Sellers to severe legal liability repercussions.
(6). Most serious Buyers are already represented by a Buyer REALTOR® who has been spending time, effort, and expense finding and showing them homes. In contrast to these viewings, the same Buyers may not appreciate viewing homes in the presence of listing REALTORS® whose primary job is reporting everything they learn about prospective Buyers directly to their Sellers (i.e. by representing the Sellers' best interests exclusively). This includes Open House Buyers who make an offer on a home without Buyer REALTOR® representation (i.e. instead being treated as a customer) with increased risk incurred on Real Property Report and Compliance; condo / commercial documents; being victim of innocent / fraudulent Seller misrepresentation; lack of proper disclosures; etc.
(7). If you live in a condo, many condo complexes will prohibit (or else should take action to prohibit) open houses because they provide easy entry for untraceable, ill-intentioned individuals (i.e. criminals) into the complex - putting both common area property and safety of other unit owners at risk.
(8). Note ‘360-degree Virtual Tours’ (i.e. unlike regular virtual tours REALTORS® commonly use in marketing that show room snapshots) is an electronic form of an Open House that gives wrong individuals (i.e. criminals) too much private information including how floors are laid out, escape route entries and exits, and exactly what valuable items are located where. Furthermore, there is a reason REALTORS® take marketing photos of a Seller's property as opposed to videos showing everything: to show only the very best parts! A good listing REALTOR® will not take photos of the 'ugly, non-photogenic' parts of the home that should only be viewed in person. Hence '360-degree Virtual Tours' should strictly be avoided in marketing for safety, security, privacy, and marketability reasons.
(9). Open Houses in general work to market the REALTOR® more than the home, and Sellers need to be aware that this unfortunately is a reason why some REALTORS® enjoy conducting Open Houses - to acquire random Buyers and Sellers who enter (i.e. potential future clients for the REALTOR®).
(10). If an Open House is conducted immediately upon listing and an offer comes in right away before any Buyer REALTORS® have had an opportunity to show the property, how does a Seller really know that they have achieved the best sale price? The short answer: they do not and most likely have not. To make sure that Sellers get the full value of the REALTOR® market, any Seller willing to accept an Open House despite the many drawbacks, risks, and liability mentioned above, should wait until at least several weeks or months after the listing start date to ensure ample opportunity has been provided to the entire market. This will give the Seller the best chance to field a multiple offer situation and ensure that every Buyer (many with deep pockets) are all given a fair chance to purchase.
In summary: when performed properly, scheduled Buyer REALTOR® showings are the primary and most effective tool for the benefit of both Sellers and Buyers - even in very slow markets. The key factor for any lack of showing response is a high desired list price (seller expectations) vs. lower actual market value (buyer expectations) - as the list price is continually dropped, the quantity of Buyers viewing and likelihood of a quick sale rises sharply. Throughout all periods of the listing, Sellers must take proactive steps to adequately protect the safety of Buyers and REALTORS® who enter their property for showings, and this includes strictly prohibiting Open Houses to avoid unnecessary Seller risk and liability.
[Article written and ©2009, ©2020 by Kelly Grant, M.Eng., ABR, NCSO, P.Eng. - REALTOR® at MaxWell POLARIS in Edmonton, AB]
Disclaimer: for those readers not currently represented by another licensed REALTOR®, to obtain more information on this topic and / or if you will be selling or buying in the Greater Edmonton Area, call Kelly at 780-414-6100 (pager) or send Kelly an email to SOLD@KellyGrant.ca to schedule a confidential appointment.