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Open Houses

Open Houses are a popular way for sellers to introduce their homes for sale to the public and for home buyers to learn about new listings but there are some "buyer beware" aspects to Open Houses that could hurt unsuspecting home buyers.

Dropping by an Open House when you first start shopping for a home may seem harmless enough, even signing a "Guest Book" for the sellers, but many home buyers are not aware that they may give up some rights as home buyers by innocently visiting homes on a Sunday afternoon.

BUYER'S TIP: If the owner or the listing agent is present while you preview a home, don't ooh and aah over the home's nice features.  While is important to seem friendly and polite, you don't want to tip your hand about how much you really love the home because it will work against you when you begin price negotiations.  This tip also applies if you are working with a sub-agent, who is working for the seller, not the buyer.  Buyer's agents must not reveal the buyer's motivation or situation unless, in the case of a very hot seller's market, the buyers and the agent strategize to appeal to the sellers to win out over other competing buyers.  Good buyer agents know how to present buyers in the best possible light without totally compromising the financial negotiations.

Procuring the Buyer

If they attend an Open House and talk with the Listing Agent about the home, the agent feels, justifiably so, that he/she is responsible for attracting the buyer to the home and will expect to collect a two-sided commission, commonly referred to as the "double dip" by real estate agents. This is referred to as "procuring cause" in the industry and it describes the relationship between the agent and the buyers.

Buyers who want to bring a buyer's agent in to level the playing field for themselves will probably find out that it is not be possible unless they stated upfront that they planned to use a buyer's agent or the Listing Agent foregoes the selling side commission.

Be On Guard

And what if the Open House has a mortgage person in attendance to "help" buyers. Will your financial information be turned over to the Listing Agent and the sellers? How will that affect any price negotiations?

Another point to consider is that it may not be the best way to shop for a real estate agent either.  You may hear someone say that they met the agent at an Open House or called the Listing Agent about a particular house and that is how they found an agent. Since it is not uncommon for new agents or part-timers to conduct Open Houses and do "up-time" answering the phones at the real estate offices, they may end up with someone who hasn't had much experience. A better approach may be to look for someone who specializes in helping buyers and to do an interview to learn about 'agency choices' and what to expect from the agent.