Navigating Open Houses for the Buyer
Your agent may bring you to an open house, or you may spot one as you drive around on your own. The host agent will have prepared an information sheet about the property, so review this first to see whether the home meets your basic criteria — price, number of bedrooms and bathrooms, and so forth.
If the place is well out of your price range or clearly doesn't meet your needs in other respects, you may just want to skip the house tour.
However, open houses can also be opportunities to do some useful intelligence gathering. You'll find that you can learn more about the neighborhood not only from the agent showing the house, but also from neighbors who will inevitably pop in — including whether other neighbors might be about to sell their homes. Open houses can also be a great way to meet and interview agents that you may want to work with.
Questions to Ask Your Agent
The agent showing the house may pump you about your own home-purchase plans and whether you're already working with an agent. That needn't be a one-way transaction. Ask some questions of your own. And take notes in front of the agent so they know you are serious — they are not exactly unbiased:
- Are you the listing agent? If they say yes, remember that they are committed to providing the best service to the seller and not you. They may be obligated to withhold information that is not in the sellers' best interest.
- Why are the owners selling? Whether the owners are moving to another state, in the process of downsizing, trading up, or buying a new home that's still under construction, knowing their needs will help you tailor your offer to take their timetable into account. If you can afford to stay in your current home (or to rent somewhere temporarily), for example, you could offer to let them remain in the home and "rent back" for a specified period. Or you may be able to close the deal at a time that suits them best.
- How long has this home been on the market? If it's reasonably priced and in good condition, it should sell quickly, unless your local market is quite weak. If the home has been on the market long enough to become a "stale" listing (the length of time for this will vary by market but conventional wisdom is three months), you'll want to know why. Or it may be an indication you can make a low offer. Once again, comps are invaluable: Is this house overpriced? Or perhaps the home was in an escrow that didn't close? If so, what was the problem?
- Have the owners received any offers? If they have, why were the offers rejected? You may find out that the sellers turned down offers that were too low or had unwanted contingencies. This knowledge can prevent your repeating the same mistake.
- Are any furniture and fixtures included with the sale of the house? It's useful to know whether the dining room chandelier and fancy window coverings are included. If they're not, and you like them, they might be something to bargain for if the seller won't negotiate on price. (On the other hand, if all of those fixtures are included but you hate them, this might be another bargaining point.)
- Do you know of any regional plans that could affect property values here? Widening of a nearby highway, for example, even if it wouldn't directly affect this lot, could change traffic patterns adversely. What about pending school district changes? Are any special property tax assessments planned for the near future?
When you enter the house, you may be asked by the host agent to sign a guest sheet and possibly provide feedback. The host agent may want to provide information to the listing agent or may be looking for buyers to represent. In some locations, if you do not have an agent already, just signing the sheet means the listing agent now represents you as a buyer's agent. Of course since they are representing the seller, that makes them a 'dual agent' and you will not receive full representation. You would need to use an agent from another company to get that. Better yet, use a buyer's agent from a company that does not represent sellers. Make sure to ask the agent before you sign anything.
Even if the house seems perfect for you, resist the temptation to sit down and make an offer on the spot. Unless the housing market in your area is sizzling, with buyers engaged in cutthroat bidding wars, you can have your agent tender an offer later that day or evening, or even the next day, once you've had at least a few hours to consider.
Close Your Mouth!
Once you enter the open house, remember the mantra: Eyes open, mouth shut. Eyes open, mouth shut.
Keep your opinions to yourself. First, you don't want even your agent to know that you think the house is just about perfect. You may be negotiating with this seller later, so you don't want to tip your hand. Second, you don't want the seller to overhear a blunt criticism of what he thinks is his home's best feature. Do not give the seller any reason to dislike you; he might refuse to negotiate his price or balk later at requests for repairs.
In fact, talk to the seller's agent (or the seller) as little as possible. Bonding with a new best friend will only make it harder to negotiate later. Yes, it might be a useful bargaining chip to know why the seller is selling; ask your agent to find out. Your job is to be pleasant — no less, no more.
Now give the house a once-over. If there's little or nothing about the house that excites you, simply say thank you, and move on to the next place.
A Developer's Open House
After some amount of shopping among existing homes for sale, you may decide you want to explore purchasing a new house or condo, perhaps one still under construction. You may even have had your eye on a particular new subdivision or building site.
If only one model is open to viewing, you'll need to pay close attention to the underlying quality of construction. Try not to be overly distracted by the upgrades — fancy carpet, counters, built-in bookshelves, and the like — or by the oh-so-tasteful furniture and accessories. Unless you're willing to pay for those lovely extras, you'll want to imagine the standard version of the home.
Not everyone has that kind of disciplined imagination, though. And not everyone knows what to look for in terms of differences in materials and the quality of construction in critical areas such as windows and joists. If you have a friend who's familiar with construction, you may want him or her to join you when you visit the model's open house. If you don't have such a friend, it will be worth your while to spend $200 or $300 to hire a professional contractor for a couple of hours to look at the home with you.
Finally, as with an Open House at an existing home, don't make an impulsive purchase on the spot. Even though the developer may offer special financing and the purchase may be good value overall, you will want time to scrutinize the contract.
Questions for the Sales Agent at the Builder's Open House
Zoning: What will be built around this subdivision — single family homes? A sewage treatment plant? Acres and acres of apartment complexes?
CC&Rs: What covenants, conditions, and restrictions apply to this subdivision? CC&Rs can range from specifying the colors the homes in the subdivision may be painted to placing upper and lower limits on the size of homes that may built. They can also involve lifestyle issues, such as prohibiting pets. If the developer can't supply a copy, you or your agent should get one from the county and read the document carefully before signing a contract. Look also for clauses related to methods for resolving disputes.
County services: What is the quality of fire and police protection? Where are the nearest stations?
References: Does this builder have some older projects in the vicinity (preferably at least two years old)? You'll want to interview homeowners there as to their satisfaction with their home and with the builder generally.
Next article: How to Approach a FSBO Seller
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