I’d like to continue talking about Open Houses this week since it’s such a big topic and everyone seems to have an opinion. Your first question right now is, ‘Does it make sense for me to do an Open House?’ To decide, it would help to then ask yourself these questions too:
If you are doing $100,000 per year, or $250,000 to $500,000 in GCI, should you be doing an open house?
How many should you do each year?
What parts should you do versus delegate?
Let’s dive deep and analyze how wildly profitable an Open House can be for your business. Let’s assume there is a $200,000 average sales price and commission check of $6,000:
Organize and run your Open House so contact information such as name, address, phone, and email are required. Offer an Open House contest to help encourage the gathering of this information. If you fail to get full contact information, you defeated the entire purpose of the open house.
Out of 100 people, 50 percent are neighbors or people who are just looking. Those 50 people are just as valuable as buyers. We call these people SOI-C unless you really hit it off with them and can then mark them as SOI-B. The neighbors who come to an 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 other 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, year or two year period. We do not care whether they list their home in 100 days or 1,000 days. As long as they are in your database, getting your information and requiring quarterly calls to touch base, we know you will get a solid shot at their business when it comes.
The 50 neighbors should lead to four to ten percent or two to five deals per year. That is $12,000 to $30,000 in GCI.
Of the 50 buyers, about 20 percent are locked-up with other agents. Of the remaining 40 people, 20 will end up buying a home within 1,000 days. Your target goal is a 50 percent market share or ten closed deals of those 20 people. Ten closed deals is $60,000 in GCI. The prediction is a ten percent conversion rate from an open house lead. From ten Open House visitors, you can expect to close one sale within 1,000 days.
If you add all this up it leads to an estimated $72,000 to $90,000 in GCI from 100 Open House people. To be conservative, let’s knock that down to $50,000 for 100 people. That means every single Open House visitor is worth $500 in GCI to you and your business.
Read the last sentence a few times. If I had asked you, before reading the analysis, how much commission an open house lead generates, what would you have guessed? If the conversion rate of an open house lead is ten percent and your current conversion rate on buyer web leads is one percent, then why are you overspending on Buyer Web Leads?
In your situation, you estimated that you got about seven people at each open house last year 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 you to get 35 deals. You stated that you already got 20 closed deals for $120,000 in GCI. That is awesome! That is fantastic!
You spent about 250 hours doing 50 open houses and you already generated $120,000 in GCI. That is about $500/hour. The best news is that you wasted 50 percent of the leads. Yes, that is good news. It means you have a huge upside.
Some food for thought. Clearly I’m in the ‘Do the Open House’ camp. Need help or want some ideas? Call me, email me, or reply to this blog. We can manage most parts of an open house for you.
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