Full disclosure: The Tim is employed by Redfin.
Just in time for the National Ass. of Realtors’ Nationwide Open House Weekend, I just posted the results of an analysis I’ve been working on at Redfin to see if holding an open house is at all correlated with the chance that a home will sell.
Do Open Houses Help Homes Sell?
…we thought it would be interesting to dig into Redfin’s stash of real estate data to answer the question: Does holding an open house make a home more likely to sell?
To answer this question, we analyzed over a quarter million listings across eleven different cities around the United States.
…
In San Francisco, an astonishing eighty-three percent of listings held at least one open house. In Phoenix and Las Vegas, less than five percent of listing had an open house. In the remaining cities, twenty to sixty-five percent of listings had an open house.
Seattle actually came in above most other markets for how common open houses are, with 53% of listings in King County holding an open house at some point while on the market.
In the other eight markets we examined, there was virtually no difference in the percentage of homes that sold, whether they had an open house or not.
…
But what happens if we break that data down a little further and take a separate look at homes that held an open house specifically within the first week of listing versus those that held an open house at some later date?Interestingly, when an open house is held within the first week, a home is thirteen percentage points more likely to sell than not having an open house at all, and twenty-six percentage points more likely to sell than if an open house is held sometime after the first week.
Here’s what that data looks like for Seattle specifically:
Obviously there isn’t some sort of magic about having an open house in Week One that somehow dramatically increases your chance of selling, because if there was you wouldn’t expect open houses held later in a listing’s life to decrease the chance of a sale. Most likely holding an open house in the first week is just a sign of a hard-working listing agent.
Open houses are fun for buyers and lookie-loos, but here in Seattle they most likely don’t help a home sell.
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Causality verses correlation issues abound. Late open house, still no sale? Probably isn’t selling for other reasons. The late open house is what realtors offer the seller as a show of marketing effort- but it doesn’t addrress the underlying problem of price, condition, location, etc.
And don’t ever try to claim that open houses are pointless. As has been pointed out repeatedly, open house traffic is one of the key indicators of market activity . . ./
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The benefit of an open house varies widely by area. Some areas are dead and some have so many visitors you almost need to hire security.
I would point out that it probably would have been a good idea to exclude vacant listings from your analysis. It is generally easy to get into a vacant house (unless the bank has changed the locks!). So there’s less benefit there to holding an open house.
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RE: Kary L. Krismer @ 2 – I didn’t call this out anywhere, but I did exclude short sales and bank-owned homes from this analysis.
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I’m not the first to say this, but open houses are really nothing more than networking events for the seller’s agent.
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It depends on what the housing market is like and where the house is. A skilled listing agent will hold an open house in a desirable area, the house will look nice, and having it be busy may add to the frothiness and compel potential buyers to make offers.
And yet I’ve held open houses in places where people weren’t loooking for houses and had nobody show up, despite putting the word out, big signs, etc. Even free food didn’t lure visitors. Maybe if I’d advertised that there would be live strippers, that might’ve done the trick.
But overall, I’d agree: The effect of open houses on selling houses is neglible. A lot of times that isn’t even the point. The listing agent isn’t even there, just some shnook from his office, who is trying to attract buyer clients.
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Live strippers? All you’d get is off-duty secret service visiting the open house, and they’d probably try to make an offer….to the stripper.
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If the seller still occupies the house, isn’t having an open house a less time consuming and more convenient way to show it to buyers?
With an open house you can get many buyers in to see it on the same day compared to one buyer at a time coming in at random days/times which I think would be a hassle.
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Open Houses are very important, now more than ever. They do need to be networked into the internet system, but people who start a Real Estate search online are more apt to go to houses that are open than those who have to call a Real Estate agent.
More clearly, if you advertize your new listing on all of the search sites, and have it open at times when people are looking, you’ll see people come in to look around. The trick is to have the home be accessable rather than a selling opportunity.
The other thing I hate is Real Estate agents who sit open houses, and don’t know anything about the property. I hate when an agent tells me they can “find out” when I ask the simpilist question, or tell me they are just doing some one a favor by holding the house open.
If you do have an open house you should have toured it, know it, research it, and be professional.
I would also say that networking with agents in the area is a good use of your time. If agents know you are there to show the house, rather than poach clients, they may be more willing to pass your listing on to buyers as something to talk about.
In San Francisco I could see it being very important to have group showings. I think it is kind of the same here. I prefer to go to an open house rather than use a key box key. I hate getting e-mails and follow up phone calls from agents. I also never sign in.
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RE: jws @ 7 – True, although you need to weigh it against the fact that most of those coming through your open house are just lookie loos and have no interest or ability to buy your home. I think I’d prefer real, qualified buyers one at a time rather than a horde of unqualified buyers all at once.
I also worry a bit about security of my possessions at a busy open house.
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By wreckingbull @ 4:
Not necessarily. We’ve had a number of listings sold to buyers at open houses. It is rare though, and only two come to mind because of the circumstances. One showed up early, while we were just setting up, and were in and out in a flash. We were very surprised when they made an offer. The other one two sets of buyers came for a second showing during the open house, and both showed up the second time at the same time.
But you are right. Some agents will try harder to find a new client than to find a buyer.
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By Jill Schlicke @ 6:
Either that, or you’d have to call the police when the secret service agent insisted that they could buy the house for $50.
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By jws @ 7:
Yes, much less annoying for sellers. Also less annoying for tenants, and it gives you easier access to the house if the tenant is requesting 24 hour notice.
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I went to an open house and put in an offer the next day, then bought it. I spent two years looking at over 3000 listings, drove by several hundred properties and toured about 100 open houses. I got to know the whole Puget Sound area and could see the differences that could be had from 250k to 1.4m properties. Our short list of candidates was qualified by a couple of open houses, and Ira took us into a couple of others. I love open houses and would prefer them over going around with an agent. Without the luxury of time, an agent showing properties is probably the only option.
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I do agree that an open house in the first week is not a cause, but rather an indication of not only a listing agent, but also a seller who has “done their homework” and put the house’s best foot forward from day 1. I recall a previous post by showing interest (page views) on a house over time; the highest interest was in the first few days after it was listed, and it dropped off sharply after that (with a slight bump when there was a price drop, but nothing like the initial spike). I think the post was actually about what day of the week is best to list your house.
It seems to me an open house the first weekend is like having a party – an excuse for those of us lazy folks to clean the place and hide our dirty underwear. If you haven’t done that then you probably aren’t going to be ready to show it, in it’s best light, to that spike of potential buyers the first week.
Anecdotally, while I have never bought a house I saw at an open house, I have in fact put an offer on one, and multiple times I have scheduled a private tour for a closer look with my own (hopefully) objective agent.
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By David Losh @ 8:
Out of curiosity, why do you think that? With the low inventory I would say they are less important now than most other times. Most buyers will find your property on their own.
Yes you’ll have more exposure with an open house, and that may lead to a faster sale or a higher priced sale. But I just don’t see how they are more important than in the past when buyers are out there scrambling to find properties before someone else does.
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I LOVE OPEN HOUSES!
I wish listing Agents would actually EARN THEIR LISTING COMMISSION and sit in their listings instead of waiting around for an offer and clicking a mouse. However, incompetent listing agents can ALSO wreak havoc on their listings, in so many ways, by hosting open houses.
Buyers and Sellers beware of………………….THE OPEN HOUSE………..
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85% to 93% of people start the Real Estate search online.
People eliminate properties they don’t want, so looking with an agent some times gets to be pressure. If a property is available for viewing, without an agent, the possibility of them having a better feeling about the property is greater.
With low inventory, and the feeding frenzy, sellers will be more inclined to list a property at the CMA, even though agents will be pushing the list ‘em low approach for those multiple offer situations.
Let me also say this is kind of a bogus set of graphs because good properties will sell no matter what. Good agents will always have properties open no matter what, so there is no relationship between the open houses and the listings.
The difference is getting a negotiation that is the best for both parties. Having a property available is probably a better way to get a better offer.
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Looks like Seattle is back to the days of 2007. Bidding wars and multiple offers is the order of the day. People are already formulating strategies to win bidding wars:
http://forums.redfin.com/t5/Seattle/How-to-win-the-quot-bidding-wars-quot/td-p/318407
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RE: ray pepper @ 16 –
The Open House is a science. If you are trawling for buyers you do it one way, if you are show casing the property it’s another skill set.
I hate agents who ask me if I have a buyer for the property, or if I’m going to sell it for them. I already covered the agents who can’t answer questions about the property.
A good open house has an agent who is prepared, has a hand out of competing properties, knows the market, and can have a conversation. The agents who just stand there or look at the computer the entire time you are there also drive me nuts.
It’s an art to have a little discussion about the property, or ask if you have questions, or can have some personality, then gracefully let you go.
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I would say they are less important because of the online thing… There’s an open house all day, every day at every house listed online. We looked online, found 5 houses every week to see and said to our realtor “show us these 5.”
The only open houses we ever went to were at our neighbor’s over the years.
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The word “association” is properly abbreviated to “assoc.” or “assn.,” Tim. You’ve erred in abbreviating it to “ass.”
Thank you for correcting your error.
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RE: Feedback @ 21 –
Ah, grasshopper- the error is the period- and the assumption of an abreviation. Often life is not what we expect. ;-)
The NAR is full of asses. Starting with their spokeman and their economist(s).
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The second derivative of Seattle Bubble = Redfin
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RE: Jesse @ 20 –
An open house gives you a chance to get to know property in general. Having your agent standing around, maybe yammering, is a hard way to get to know property. As Ray says you need to educate yourself if you are going to rely on your own instincts.
Every one searching for a home should visit open houses before choosing an agent, and get to know the houses, and neighborhoods they are looking at. It’s time well spent.
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By David Losh @ 24:
Maybe you yammer, but what I do is point out things to clients that they might not be aware of. Many if not most consumers are not terribly familiar with types of siding, roofing, plumbing, drainage issues, structural issues, resale considerations, waste disposal issues, etc. There’s more to buying a house than figuring out where the couch and TV will sit.
That said, I don’t have a problem with clients going to open houses. I just don’t see it being in any way a necessary part of the process.
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RE: Kary L. Krismer @ 25 –
You’re yammering.
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I hate open houses because they have a creepy sellers agent hovering around, making you feel bad for talking trash about the chocolatehole you are looking at or yammering on and on about how wonderful everything in the home is.
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@The Tim, awesome analysis as always and I was wondering if you had excluded distressed properties which you then answered in the comments.
Most of the time open houses just suck, waste time and do not sell the home. Only once in a while do they actually make sense when you turn them into an open house extravaganza with mailers, door knocking, lenders, telemarketing, 10+ signs, etc. …and even with those crazy ones we usually just collect a bunch of buyers to sell another home too. My team sold over 200 homes last year and none of them were because of an open house.
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RE: wreckingbull @ 4 –
Actually that is more true when the agent holding the Open House is not “the seller’s agent”, which is often the case. If the agent holding the Open House makes nothing if it sells to a buyer who has an agent, which is the case if the Open House agent is not the listing/seller’s agent, then their primary objective becomes to get a client vs to sell the house.
In WA the Open House agent becomes the agent for the buyer if they are not the agent for the seller under our Agency Laws. The next time you go to an Open House ask if the agent is the Listing Agent. Odds are a high percentage will say no.
I personally hold 2 Open Houses back to back most always when I list a home. I do this to spend a good 6 solid hours or more in the home observing what potential buyers and even neighbors are saying. While we think we know how buyers will perceive the home as to its strengths and weaknesses when we list it, it’s always good to double check reality against perception early in the process.
I hold two Open Houses the Sunday after it is listed and the Sunday after that, to make sure there isn’t something more we can do to “position the house to sell”.
I did more Open Houses on this one that closed yesterday because the new home purchase was contingent on the sale of the home below. We had a short fuse and were worried about being bumped on the new construction home before getting an offer on the one below.
http://www.redfin.com/WA/Seattle/8532-16th-Ave-NW-98117/home/12300621
We didn’t want it to sell too quickly either. Matching up closing dates on a home that is being built to the home that is being sold is no easy feat. The new home will be finished this coming Friday…about as close as you can get with a short post occupancy. Worked out well.
There were no real weaknesses that we didn’t already know prior to listing the home. Every home has strengths and weaknesses. Open Houses help to double check that original evaluation as to the balance of pros and cons.
They are a valuable tool if they are done by the listing agent personally, vs someone who just wants to spend 3 hours trying to grab a new buyer client.
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RE: ARDELL @ 28 –
Excellent points, however some agents prefer to have a buyer’s agent present who will also collect feed back, but avoid a dual agency situation.
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Between you, me and guy down at the pub, most open houses are just an opportunity for Realtors to generate new clients. However I do think that it is important to make sure to do an open house the first weekend the home comes on one the market. I’m surprised the Seattle % is only 53%, considering you edited out short sales and REO’s. I like doing open houses for my own listings where I have worked with the seller to get it ready for market and dare I say formed a wee emotional attachment to the place…
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RE: David Losh @ 29 –
If they are giving feedback to the seller via the seller’s agent of what buyers said at the Open House…they are acting as a Dual Agent, David.
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RE: ARDELL @ 31 –
You have to have representation to be an agent. Gossip, is just gossip no matter where it comes from.
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By corncob @ 27:
I prefer the agents at open houses that just sit there and leave you alone to the ones who follow you around and hover. I sometimes accompany clients to open houses. I always prefer not to have someone associated with the seller there, whether it’s the sellers themselves, or their agent. Because I get a strange pleasure out of talking trash about the “chocolate” hole we’re seeing, and prefer not to have to wait until we’re out of the house to unload about what a piece of “chocolate” it is. I’ll still state things I find wrong with the house during the open house, but prefer to be a little more unrestrained.
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RE: David Losh @ 32 -
The agent has to decide if they are doing the Open House as a Buyer’s Agent or as a Sub-Agent of the seller. They can’t straddle the fence on that as it is a disclosure issue. If someone wants to buy that house…it is not “gossip”. Anything said by consumers to licensees is not gossip.
You either have a duty to keep confidences or you don’t and you need to know which that is before you let a consumer inside to “chat” with you.
Read the Law. You are by default representing any buyer you speak with…unless you disclose that you are acting as a sub-agent of the seller…or are the actual Listing Agent. I always disclose that I represent the seller of the home when I do an Open House. It is the consumers’ right to know and you can’t decide after the fact.
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By David Losh @ 29:
You’re not going to create a dual agency situation by having the listing agent hold an open house. That would only happen if a buyer showed up who the listing agent already knew and then only if the listing agent had already had the buyer under a written agency agreement. If an unrepresented buyer walks in and wants the listing agent to prepare an offer to purchase, the buyer remains unrepresented. If a buyer comes in who the listing agent had shown houses to in the past, but was not covered by a written agency agreement, the buyer would become unrepresented.
And there’s no reason that a listing agent can’t get buyer feedback.
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By Ira Sacharoff @ 33:
It’s a bit different for you being an agent. The listing agent is much less likely to follow you around because you are an agent.
Stated differently, a listing agent is more likely to follow someone around who is walking around inside their seller’s home, especially if that home is occupied. But if that person is accompanied by an agent, then they’re more likely to give them space.
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RE: Ira Sacharoff @ 33 -
Haha…A seller leaves their home for 3 hours with their babies and pets in the hope that a buyer may buy it. That you don’t want the seller’s agent in the room is counter to the owner’s objective of having the Open House.
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Tim, I really have trouble agreeing with you on a lot of this. You say that holding an open house decreases the chance of making a sale, but your results show 42.9% vs 42.4%, which I really doubt is a statistically significant difference. In my opinion, you are making a statement that is not supported by data.
On the other hand, your results show that holding an open house in week 1 does provide what is likely a statistically significant bump in the sales rate. So why don’t you just make the statement that holding an open house early in the listing process does seem to be correlated with whether the house sells or not?
Furthermore, you have one explanation for the statistically significant portion of your results: that the bump is due to a good agent, not the open house. However, an equally plausible assumption is that the most critical time for selling a home is when it first hits the market, and anything you can do to bump up the interest/visibility of your home in that time frame is important.
Personally, my takeaway from this is to tell anyone who is selling a home to hold an open house the first weekend after their home hits the market, maybe another one a week later, but to not waste their time holding open houses after that.
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RE: ARDELL @ 34 –
You might have a point there. Anyway that I work it around in my brain there is always the chance of an agent misrepresenting themselves.
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By ARDELL @ 34:
I agree the agent holding the open house needs to know who they represent, but you’re not correct that it’s the agent who gets to decide that. I don’t think that was ever the case, because recent prior versions of the Listing Agreement form referred to “broker,” and now the form refers to “the Firm.”
It is clearly up to the brokerage (the “Firm”) to appoint additional agents to act on the seller’s behalf. Thus it is not within the listing agent’s power, and clearly not within the power of the agent holding the open house. And under the most recent forms seemingly now that decision as to be made by the firm with respect to each property, and not possibly just as a firm policy. That it was unclear before was something I complained about way back in 2007.
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RE: Kary L. Krismer @ 36 –
When I was referring to agents following around and hovering, I was recalling the days when I was not an agent. Being the agent accompanying buyers to an open house is like having a bulletproof vest on. Like Martha Stewart says ” It’s a good thing.”
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RE: masaba @ 38 –
The open house is an important tool, and the data doesn’t show price compared to open house, or time on the market, or a correlation of open houses to price reductions, or anything really.
It’s marketing http://www.youtube.com/watch?v=nvRWtMPDGRk&feature=youtu.be
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By ARDELL @ 34:
Don’t you work in a two agent firm, and if so, aren’t you always either the listing agent or co-listing agent?
Do you do open houses for listings of other firms? I’m not sure you could ever represent the seller in such an instance.
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By masaba @ 38:
I think you’ve misunderstood what I wrote. I didn’t say that “holding an open house decreases the chance of making a sale.” I said:
In other words, holding an open house is not the magic potion that makes a house more or less likely to sell. It’s not the driving factor. There’s correlation there, but almost certainly not causation. It’s just a sign of other things that are what’s really driving the chances of selling.
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RE: ARDELL @ 28 – OK, you win on a technicality. Remove the term “seller’s” from my post.
The point I am making is that open houses have a primary purpose of agent networking. If the home sells as a result of the open house, great. I am sure it does happen from time to time.
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By Jesse @ 20:
These days I’m lucky if I see one house come up each week that I would bother asking a realtor to show me. Not much of anything in our search criteria that is active right now, and a lot of it is pretty “chocolatey.”
We are still months away from the active phase of house hunting, so we haven’t officially hired a realtor yet. Open houses are nice for us because we can get some idea of what’s out there without needing an agent to let us into properties. When we see an open house in a neighborhood we really like I set up a specific search on Redin just for that neighborhood for future listings. I don’t think that is particularly helpful for the sellers of the open house, though. We’ve only seen one house that we would have considered buying, but it wasn’t quite “perfect” enough to move up our buying timeline.
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RE: wreckingbull @ 45 –
It happens more often when the listing agent is doing the Open House as there is more play in the commission structure. If you did a survey of the ones that did sell at an Open House and separated them into who was doing the Open House, the odds would favor the ones done by the Listing Agent.
It depends how savvy the buyers are as to playing the commission structure angle.
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RE: Kary L. Krismer @ 40 –
There are many cases around the Country that base the decision on how the agent acted vs the pure legal attributes. That is why Transaction Brokerage as an option didn’t spread around the Country from the few States that have tried it.
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I stopped at an open house today that I’m sure isn’t on any one’s criteria list, but it’s a great house.
The structure, and lot are excellent, and the price is negotiable, as the agent there kept pointing out.
You just never know what you will find until you look.
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haha. here’s TheTim on youtube talking about this article:
http://www.youtube.com/watch?v=nvRWtMPDGRk
good job.
looking forward to more videos. may i suggest you wear a bow tie and pocket protector next time.
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By ARDELL @ 47:
Fixed your post.
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RE: Kary L. Krismer @ 51 –
Kary…don’t be what they call you. Seriously, not EVERY one needs an agent and Open Houses are a great way for them to see property without needing an agent in tow.
I’m surprised The Tim calls them “pointless”, given they are the best way for homebuyers to have free and easy access to see property. I would think he would be pushing for ALL homes to be Open as often as possible.
Having to call an agent to see a home, or actually hire one a year in advance of being ready to buy one, is not the best route for most people.
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RE: Jill Schlicke @ 6 – Funny!
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By ray pepper @ 16:
Yeah, I went to one last weekend with my GF. The listing agent was driving a loaner and said her car was in the shop along with her entry key. She told us to feel free to walk around the property and look through the windows.
The house was listed at least 20% above what it will eventually sell for if prices stop falling now, and they don’t end up chasing the market down. But what really turned me off about it was the unbelievably cheap exterior paint job complete with numerous runs, paint on some of the windows, and 75% of the foundation was oversprayed. If that weren’t enough, it was all one color. They didn’t even bother trimming it out.
But hey, the RE agent gave me a really high quality full color pamphlet of the house. That’s got to be worth at least $100K right there.
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By ARDELL @ 28:
I’ve been to a ton of open houses where the agent is not the listing agent. It’s been my experience the listing agents usually give me less pressure to buy. But I’ve had some crazy listing agents who have gone so far as to make fake phone calls claiming so and so is very interested in the house, blah, blah, blah in an attempt to rush me into making a deal.
I’m confused on your statement about the open house agent becomes the agent for the buyer. If I go to an open house, and the agent is not the listing agent, and I later buy the house with my own agent, does the open house agent (non-listing agent) have rights to a buyer’s commission, seller’s commission, or what?
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By David Losh @ 26:
The agents are not necessarily even saying anything useless. It’s just very difficult as a buyer to relax and really take in a house when they are distracted by the presence of their RE agent. When you go to an open house, you don’t have to worry about anything or anybody. You don’t even have to be nice to anybody if you don’t want. This allows a mindset that really lets you dig into things.
I remember one open house I went to for a really beautiful waterfront house people were just pouring through. It was built in 1925, had been very nicely updated, and the deck looked right out over the water. It was on a large lot with 160′ of frontage with a pristine concrete bulkhead. What more could anybody ask for?
Well, while the agent was distracted, I decided to go under the house. Who in their right mind is crazy enough to go crawling around under an old house at a social event like an open house? Well, I found a lake under there. Heck, if I’d have brought a couple of lures, I probably could have caught striped bass down there. I really, really liked that house, but I couldn’t deal with the free lake, so I took a pass.
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By ARDELL @ 52:
What does any of that have to do with your statement about a buyer playing the commission angle? If not ignorant, that’s at least naive.
Why would anyone try to play the commission angle, to uncertain results, when there are rebate brokers who give you certain results on commission?
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By Jonness @ 55:
You’re thinking of procuring cause, and that would be extremely unlikely, if not non-existent. More likely all Ardell is address is that if you use them to write up an offer, they would be your agent, not the seller’s agent.
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RE: Jonness @ 55 –
“I’m confused on your statement about the open house agent becomes the agent for the buyer.”
When a person with a real estate license engages with a consumer, either briefly or for the long haul, it is important for both the licensee and the person to whom they are speaking to know the standpoint from which they are speaking.
Real life example from a couple of days ago. The entire basement/lower level of the home is the original tile from when the home was built. Speaking from the standpoint of “representing” a buyer, one would suspect that it is asbestos tile due to its age and the pattern of that particular tile. Speaking from the standpoint of “representing” the seller, the tile is not known to contain asbestos, and that is what it says in the Seller Disclosure which indicates “no” as to hazardous substances in the home.
Whether or not that is in fact asbestos tile does not come up in the normal course of buying that home because asbestos cannot be “seen” and the material has to be tested at a lab (24 hour turn around with a cost of $35) to ascertain if it does in fact contain asbestos. The normal inspection clauses do not allow you to take the inch piece (including all layers) of that tile to bring to the lab.
As an agent for the seller, one might take a one inch piece to the lab to have it tested, so as to insure that the Seller Disclosure is accurate, but not likely. An agent for the buyer would include a buyer’s right to take a one inch piece of the tile to a lab as part of the inspection process. The parties would agree to where that one inch piece is taken from, usually the back of a closet or in the case of this week, in the extended section running into the garage next to the furnace where there is already a chip out.
Now let’s look at the Law of Agency Pamphlet in the State of WA that is given to all prospective buyers of homes that describes who represents whom.
“This pamphlet describes your legal rights in dealing with a real estate broker or salesperson. Please read it carefully before signing any documents. A licensee who works with a buyer represents that buyer unless that licensee is the listing agent, the seller’s subagent, a dual agent, the seller personally, or the parties agree otherwise. Also states that in a transaction involving two different licensees affiliated with the same broker, each licensee SOLELY represents his or her client, unless the parties agree in writing that both agents are dual agents.”
(Kary is correct that there are some recent changes, but until the material given to consumers changes, the above is what the State requires buyers to read and believe. Perhaps it is in the process of revision, but this is the wording in material given to buyers of homes today.)
If a buyer goes through an Open House and engages with a licensee in the room, whether that be the Listing Agent or an agent sent by the Listing Agent or an agent who came in to the Open House for another purpose, it is important for the agent to know from what standpoint they are answering any question the buyer may have.
Buyer: “Does that tile have asbestos? It looks like tile I saw somewhere that contained asbestos.”
Agent for the Seller: “Let me look at the Seller Disclosure Statement. The Seller has indicated that he has no knowledge of hazardous materials in the home.”
Agent for the Buyer: “The Seller has indicated in the Seller Disclosure Form that he has no knowledge of hazardous materials in the home. The Home Inspector will likely have a waiver regarding that issue because asbestos cannot be seen with the naked eye,and the inspector cannot remove a piece of it to have it tested to know for sure. To know for sure, you need to include in your offer the right to remove a one square inch of tile to have it tested as part of the Home Inspection process.”
When the agent is answering your question you have a right to know who they are representing when answering the question. Are they the Listing Agent who represents the Seller? Are they an Open House agent sent by the Listing Agent as a subagent of the Seller. Or are they “working with you” for that moment, and answering as a buyer’s representative vs an agent for the seller?
If the buyer has received a Law of Agency Pamphlet, not necessarily at the Open House, but from a previous experience with an agent, this is what they are told to believe: “A licensee who works with a buyer represents that buyer unless that licensee is the listing agent, the seller’s subagent, a dual agent, the seller personally, or the parties agree otherwise.”
Consequently if the licensee you ask a question is the owner of the home,they need to disclose that before answering the question. Likewise if the person answering your question is the Listing Agent, a subagent of the seller or a dual agent, they need to disclose that before answering your question(s). Lacking any disclosure otherwise, it would appear from the Pamphlet that says at the very top “This pamphlet describes your legal rights in dealing with a real estate broker or salesperson.” that you can presume that the answer is giving you the information you need from a licensee who represents you, lacking any disclosure to the contrary. Again…representing you in that moment of engagement…during that brief conversation.
The Law is to protect people who ask questions of licensees or REVEAL information to licensees.
A potential buyer at an Open House says they really, really LOVE the house, and can well afford it, plan to offer less than asking but willing to pay full price if necessary. An agent for the seller is obligated to disclose that information, revealed at the Open House, to the seller of the home (feedback). An Agent for the buyer is conversely obligated to keep that confidence. That is why there is a law of presumption that there is a confidence…unless it has been disclosed to the buyer that the licensee in the room represents the seller or is the seller.
BUT as David rightly points out: “You might have a point there. Anyway that I work it around in my brain there is always the chance of an agent misrepresenting themselves.” The odds that the licensee in the room knows or cares whom they represent, besides themselves, is a long shot. :)
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To David,
There was once a Law in one State that required licensees to have a buyer sign a simple form before engaging in conversations about real estate, or entering a home with a consumer. That form simply read:
“I do not represent you until and unless you hire me to do so.”
You seem to be under the impression that is the case here and now, but it is not. The Law presumes buyer representation lacking a disclosure to the consumer to the contrary.
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RE: ARDELL @ 59 – Quite a lengthy reply, but I don’t think that was the question asked.
If you want to go down that route, I don’t think you need to get so involved. It’s probably enough to just point out that a buyer’s agent should answer questions different than a seller’s agent.
In a slightly different context, at the great Core class I wrote about ( http://www.trulia.com/blog/kary_l_krismer/2012/04/praise_the_clockhour_course ) Annie Fitsimmons brought up the topic of some bank contracts requiring the buyer to pay the real estate excise tax. A REO agent pointed out that what he did in those situations is add a clause requiring the seller to pay for it! Annie’s response was to keep in mind who you represent! Perhaps that is okay with the bank client, but still keep in mind who you represent!
The point is in that context it should be the buyer’s agent (or preferably their attorney) to bring up that issue. It would be rather unusual for the seller’s agent to do that. The same thing is true about how buyers agents show properties and how listing agents show properties to buyers. It’s different, because they represent different sides.
Or to make it even more simple, a buyer says to an agent: “I’m willing to pay $350,000 for this house, but I only want to offer $325,000.” What a buyer’s agent would do with that information is much different than what a seller’s agent would do.
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By ARDELL @ 60:
You’re right it’s not the law, but your description of the law is also wrong.
You represent the buyer unless:
(a) You have entered into a written agency agreement with the seller.
(b) You have entered into a subagency agreement with the seller’s agent.
(c) You have entered into a written agency agreement with both parties (dual agency).
(d) Your are the seller or one of the sellers; or
(e) The buyer and seller agree otherwise in writing after the licensee has complied with RCW 18.86.030(1)(f).
See RCW 18.86.020.
If you say you represent the seller when you really represent the buyer under those tests, you’re likely going to commit an act of malpractice when dealing with the transaction.
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RE: Kary L. Krismer @ 61 -
Until and unless a seller gives written permission for a licensee to use that Open House to represent someone other than him…the owner of said meeting place, you have the potential for undisclosed Dual Agency.
The Law goes no further than what was handed to a buyer outlining what they have a right to expect of licensees under the Law. Seems the pamphlet needs a revision if you disagree with it. A licensee does not need to be hired by the buyer to be legally expected to act as one, under current local representations made to consumers about said law and consumer rights covered therein.
It’s simple. When a licensee opens their mouth to a consumer the consumer has a right of expectation that the answer and info represents the buyer’s best interest, unless otherwise disclosed to the contrary.
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RE: ARDELL @ 60 –
I’m not under any impressions at all. Why would you head down that road? or the road of your comment at #59.
Kary is a lost cause, but you should know better.
The licensee makes a claim to the relationship they have with the person they are engaging or who have engaged them. If the agent flip flops on that relationship, it’s a problem.
Any agent can stick to their guns, and commitment to the people they meet. It shouldn’t be that hard, they shouldn’t need to be reminded.
Of course I always advocate a Buyer’s Agency Agreement. It’s a good tool for the consumer to have, but it’s not required.
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RE: David Losh @ 64 –
Just because Agency conversations are boring as hell…what do you think of asbestos floor tile, David?
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RE: ARDELL @ 65 –
It would need to be tested, and disclosed.
The Agency discussion is fascinating to me, especially the thing about procuring cause at an open house, it’s kind of a gray area, which is where the whole attorney, agent discussion falls apart.
There are a lot of gray areas in Real Estate that you usually navigate through quite well, in my opinion.
Engaging in this “discussion” is pointless.
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By ARDELL @ 63:
I already set forth what the statute said. It says absolutely nothing about seller permission regarding who represents who in this context, other than an agreement to change from the statutory scheme (which would be very rare). I would suggest, however, it’s a good idea to have owner permission for a non-seller agent to hold an open house. It is, after all their house!
I have no idea where you think the dual agency is going to come from. For that you would need the agent to be both the listing agent and have a written agency agreement with the buyer. Not likely to happen in the context of an open house.
Assuming you’re talking about the Law of Agency pamphlet, it says exactly what I said. Perhaps you should read it again. I certainly don’t disagree with it (although it does perhaps need some tweaking for the new licensing law, but not in this area, which wasn’t amended).
What? That makes no sense whatsoever.
Incorrect again! That would only be true if the agent was the buyer’s agent. Compare RCW 18.86.050 and 18.86.040. If it’s the seller’s agent then the only thing the buyer can expect is:
(a) To exercise reasonable skill and care;
(b) To deal honestly and in good faith;
. . .
(d) To disclose all existing material facts known by the licensee and not apparent or readily ascertainable to a party; provided that this subsection shall not be construed to imply any duty to investigate matters that the licensee has not agreed to investigate;
See RCW 18.86.030. The seller’s agent is supposed to represent the seller’s interests. Most buyers realize that.
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By David Losh @ 64:
Sometimes the flip-flop is required by law. If I show a buyer (no agency agreement) five houses, and one of them is my listing, I am their agent when I show them four of the houses, but the seller’s agent when I show them my listing. It’s very important that an agent both understand that, and disclose that, but it’s not the disclosure which changes the relationship. It’s the law!
If the buyer is under a written buyer agency agreement, then I would be their agent at four houses and a dual agent at the my listing.
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RE: Kary L. Krismer @ 68 – RE: Kary L. Krismer @ 67 –
This is about open houses. We’re talking about some poor schnook walking into an open house, on a Sunday afternoon, but according to you they need to be aware of the RCWs pertaining to what?
It’s an open house, and who holds it open. The person walking in should be able to ask questions for goodness sake, and expect an answer rather than a tirade about the law.
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By David Losh @ 69:
What makes you think they won’t get answers? What makes you think they’ll get a discussion of the law? All that needs to be said is: “I represent _________.”
The thing is though, to be able to fill in that blank and then answer questions the agent needs to know who they represent! Apparently that’s a problem for some agents.
In other contexts, I’ve known for quite some time that some agents have a hard time understanding this area of the law. For example, some agents think that if an unrepresented buyer wants to make an offer through them, that they need to also be the buyer’s agent to get the Selling Office Commission. Apparently they think it’s called the Buyer’s Office Commission. Practically impossible to not commit malpractice if you think that and make that mistake.
And still in other contexts, if an unrepresented buyer calls and wants to see one of my listings, when I meet them in person I will tell them that I represent the seller, and that if they want me to write up an offer I will still only represent the seller and not them. I then mention that they can use other agents or an attorney to make an offer. It doesn’t take that long to do, and prevents misunderstandings down the road.
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As both a homeowner and an investor of single family rental property, I find open houses very interesting. I inspect similar houses to my rentals and observe what prices are being asked and research what the house ultimately sold for. I find that always interesting, especially in these turbulent economic times. Furthermore I have obtained some of my best decorating and remodeling ideas for all my houses from observing similar houses. In addition, I have shied away from other decorating and remodeling ideas when I have observed their operational failure in similar houses to the ones that we own.
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Regardless of what the law says about whom has an obligation to whom, any buyer who walks into an open house should treat whatever information they receive from the showing agent as if it came from the seller’s agent because that’s the safest thing to do. I wouldn’t waste my time wondering “Is this agent giving me good advice or trying to sell me the house?”
Also, if I were a seller and my agent allowed another agent to hold an open house for my property and then proceeded to point out things like “you know, that tile might be asbestos, we don’t really know,” I would be pretty ticked off and would consider that a violation of my agent’s responsibility to me for allowing it to happen. I would expect whomever my agent allowed to hold an open house for my property to show the property as if they were my agent, not an agent for the buyer.
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RE: StillRenting @ 72 – As to your first paragraph, I don’t understand why assuming the information came from the seller’s agent would be “safer.” I could see why assuming it’s the seller’s agent and not disclosing information to them would be safer.
As to the second paragraph, I know of a listing at another firm which only lasted about 7 days because the seller was not happy with the non-listing agent holding the open house, and what was overheard being said.
Ignoring that, you could accomplish what you want regarding non-listing agents, but it would probably be easier to just insist that only the listing agent(s) hold open houses. That should probably be a question you ask the listing agents when interviewing them.
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