The Power of The Open House

Vivian S. Toy of The New York Times reported Sunday about tightening restrictions that many buildings are implementing regarding open houses

In the frenzied real estate market of recent years, the cries of “Enough!” from building residents won out, resulting in bans on open houses across the city. And although the market slowed a bit last year, open houses are once again attracting as many as a hundred people in an hour, giving the anti-open-house forces fodder for keeping, and perhaps even expanding, restrictions.

“We’re definitely seeing more buildings that don’t allow open houses, and it’s largely because people living there have security concerns,” said Deanna Kory, a senior vice president of the Corcoran Group. “Plus there’s also the inconvenience factor and the annoyance factor.”

There are some buildings, mostly on Park and Fifth Avenues, that have never allowed open houses, but in the last few years, restrictions have spread well beyond white-glove prewar co-ops on the Upper East Side. Brokers say they now encounter “no open house” rules in postwar buildings and even in condos, which generally have more liberal policies.

Indeed we in the industry are seeing new rules and regulations regarding open house policies in buildings that would have once begged for the kind of traffic we have these days.  Just 2 weeks ago, my team and I held an open house for a 2BR apartment on the Upper West Side.  As a direct result of the open house, which was attended by more than 100 people in 90 minutes, we had 6 offers and have gone into contract at a price above the asking price.  For these sellers who have a 10 month old daughter and therefore a mass of toys and baby gadgets, the open house was the most effective and efficient way to sell their apartment with the least amount of headache for them.  One big cleaning and vacating the apartment for 90 minutes was all that was necessary to procure a qualified buyer at an excellent price.  Had their building prohibited open houses, we would likely still be showing the apartment and they would have been faced with constant cleaning, picking up, and leaving their apartment at times that wouldn’t have always been convenient for them.  This particular apartment was asking just under $1M; a price point that makes an open house a MUST.

Real estate agents also said that restrictions tend to hurt smaller, less expensive apartments more than larger, higher-priced ones. “Open houses are really almost required for anything under $1 million,” said Mr. Mahler of Brown Harris Stevens. “Who wants to go back and forth to show a studio? It’s just more efficient, because you’re making things accessible to people who are working very hard during the week and who don’t want to make special appointments to look at real estate.”

It’s no secret that higher end property buyers are more inclined to request individual appointments.  That said, if a seller has a sought after property, regardless of price point, an open house can be incredibly effective.  A colleague of mine recently brought a 10 room Park Avenue apartment onto the market at a very appealing price.  Because the building didn’t "officially" allow open houses, she held an "appointment only" open house for 2 hours one day and had 22 people view the space in the first day.  Again, multiple offers were submitted and the apartment sold for more than the asking price.

There are some buildings out there that will never be effected by the lack or prohibition of open houses.  And I believe some, like many of the elite properties on CPW, Park Ave and Fifth Ave, should absolutely prohibit them as the pool of buyers for these properties tend to lack patience for the hoards that may attend an open house.  Of course, there are some security issues as well.

Paul Gumbinner, the co-op board president at Southgate, a complex of five prewar buildings on East 51st and 52nd Streets, said that his board stopped allowing open houses about 10 years ago mainly for security reasons. “We don’t want strangers walking around in the buildings,” he said. “But I also think — and I don’t mean to sound snobby — that really nice, upscale buildings don’t allow open houses.”

The most important factors that Boards and shareholders need to consider is how the prohibition of open houses may ultimately effect their bottom line and if they even care if it does.  People want what others want and when an open house is well trafficked and mumblings are going on in every corner of the home, there is a greater likelihood that more than one person will be interested in the property.  As Hall F. Willkie, the president of Brown Harris Stevens, said in Ms. Toy’s article "most of the problems that arise from open houses are easily addressed with proper management…like anything…you can do it right and make everybody happy.”  

Some of the things that Boards and shareholders should consider:

  • Is the "type" of apartment in your building such that an open house is necessary? (Open Houses work with all "sought after properties" regardless of price point).
  • Only allow a couple of open houses during any given time (i.e. 2-3 open houses in building from 12-2PM and 2-3 open houses from 2-4PM).
  • Restrict agents to showing only at certain times (i.e. open houses may be held from 11-3pm on Sundays only).
  • Require more than one agent to "work" the open house insisting that someone escort all prospective purchasers to and from the unit.
  • Insist that all attendees sign in with complete information (perhaps showing ID) prior to viewing the property.

Ultimately, in my 15 years, I have found that open houses are a necessary and incredibly effective tool in creating a buzz about a property and procuring the most qualified buyer at the highest price.

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