If you are doing $100,000 per year, or $250,000, or $500,000 GCI, should you be doing an Open House?How many should you do each year? What parts should you do versus delegate what you hate? Let’s dive deep and analyze how wildly profitable an Open House can be for your business.
Let’s assume a $200,000 average sales price and commission check of $6,000. We want to organize and run our open house so it is required to provide contact information of name, address, phone, email. We will also offer an Open House contest to help encourage gathering this information. If you fail to get full contact information, you defeated the entire purpose of the Open House.
Imagine 100 Open House people over a number of open houses. Every couple, such as husband/wife, counts as one person to keep this simple. Out of 100 people, 50% are neighbors or people just looking. Those 50 people are just as valuable as the buyers. We call these people SOI-C unless you really hit it off with them and you can then mark them as SOI-B. Remember, the neighbors who come to open house are the ones who talk about real estate prices and agents with other people. They are influencers. They are sneezers. You want to impress them and have them tell neighbors that you ran the best Open House they have ever attended. Some of these people are THINKING of buying or selling in the coming months or year or two. We do not care whether they list their home in 100 days or 1,000 days. As long as they are in our database getting our information and quarterly calls to touch base, we know that we will get a solid shot for their business when it comes.
Those 50 neighbors should lead to 4-10% or 2 to 5 deals per year from first deal with you or referral business. That is $12,000 to $30,000 GCI. Of the 50 people who are buyers, about 20% are locked-up with other agents, or 10 people. Of the remaining 40 people, about 20 will end up buying a home within 1,000 days and your target goal is getting 50% market share or 10 closed deals of those 20 people. 10 closed deals is $60,000 GCI. Also, if you note, the prediction is 10% conversion rate from Open House lead. Thus, from 10 Open House visitors, you expect to close 1 sale within 1,000 days, most likely a lot sooner.
So, let’s add up the $60,000 and $12,000-$30,000 and that leads to estimated $72,000-$90,000 GCI from 100 Open House people. To be conservative in true BDA fashion, let’s knock that down to $50,000 for 100 people. Every single Open House visitor is worth $500 GCI to you and your business.
Read that sentence above a few times. If I had asked you before reading the analysis, how much commission is an Open House lead going to generate, what would you have guessed?
If the conversion rate of an Open House lead is 10% and your current conversion rate on Buyer Web Leads is 1%, then why are you overspending on Buyer Web Leads? In your situation, you estimated that you got about seven people at each Open House in 2013 and hosted about 50 Open Houses. You had excellent success at gathering contact information for every person which is currently in a Google Doc. So, you have about 350 people. Based on this, we would expect to get 35 deals ultimately. You stated that you already got about 20 closed deals for $120,000 GCI.
That is awesome! That is fantastic!
You spent about 250 hours doing 50 Open Houses and you already generated $120,000 GCI. That is about $500/hour. And the best news is that you wasted 50% of the leads probably. Yes, that is good news. It means you have a huge upside.
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