It's THE END for Open Houses. Maybe.

Starting in mid-August, I will refuse to host any open houses for my seller clients. I don't expect to do them ever again. Maybe.

AND: I also strongly caution you against attending open houses, unless you yourself are 1) an agent, or 2) attending together with your agent.

Why, you ask? Aren't open houses a key part of the home sales process?

Answer: Yes, they were. But the world is different now.

Why? You may have read news about how real estate buyer representation and commissions are changing, due to the settlement of a major lawsuit called "Sitzer et al v. National Association of Realtors et al." But that's not all that's changing. There's a major change afoot for how residential real estate transactions will take place across the United States.

One small part of it is how open houses will (probably) work.

Final details are still being worked out with much acrimony on all sides, but after the settlement of combined lawsuits has been approved by all parties and the Justice Department, here's what the challenge appears like it's going to be with open houses.

[NOTE: I don't have all the details of the negotiations. If I've left something out, or gotten something wrong, or the facts have changed since I wrote this, or you have a question, please let me know in the comments.]

HERE'S HOW IT WILL ACTUALLY WORK (It seems… in general terms… at least based on current discussions.)...

1. To tour a property, you, the buyer, will be asked to sign a document.

With the new rules, buyers will be asked to sign a document before viewing an open house without their agent.

2. The legal responsibility is on the buyer to know their status with their agent.

When agents hosting the open houses greet the potential buyers with documents upon entering the house, the buyer will be asked to state whether they are:

a. Currently in exclusive representation by an agent.

b. Currently in a non-exclusive representation by an agent.

c. Not currently represented, but would like to be represented by the listing agent.

d. Not currently represented, and would not like to be.

e. Verbally decline to state any of the above. 

Agents will need to know your status before speaking with you the buyer, because both you and they have liability depending on your declared status as a buyer.

3. Open house quality of service will depend on buyer status.

If you are a buyer and not currently under a signed representation, the seller's agent will be discouraged from giving you any verbal information about the property or market.

If you are not sure about your status with agent representation, or don't state accurately whether you're currently represented - well, nobody knows what happens in that situation quite yet.

4. Before touring the property, the potential buyer is asked by the seller's agent whether they'd like representation.

In order to tour a home, buyers will be motivated to sign representation agreements with the seller's agent, because if they're not formally represented, the agent won't be able to answer their questions about the property. Even though all agents and buyers will all be bound by these new open house rules, I don't like them for a few reasons:

a. I don't think people should sign important financial agreements without careful consideration, especially not on the spur of the moment, just to view a house.

b. This will create more situations where the buyer is also represented by the seller's agent. While buyers may think this is to their advantage, it's rarely in the best interests of the buyer or the seller.

c. Some people will just decline to state anything because they just want to walk around the house. This seems harmless, but it is potentially the most risky situation for all concerned. The risk of a potential buyer touring a property and declining to state any representation, or to state anything at all, or choosing remaining anonymous, is potentially fraught. This lack of disclosure or certainty might create something called "undisclosed dual agency."

With undisclosed dual agency, multiple agents and their agreements can potentially be voidable, a fact which parties may not know until later.  

MY BELIEF

I have always believed that all real estate agreements, including those with your agent, should only be signed after discussion, consideration and understanding of the terms. And that's unlikely to happen in the doorway of an open house. So I will not be doing it that way.

OVERALL

Overall, there are a lot of changes in the works for the real estate industry. And I'm here to serve you, my clients, to the best of my ability, just as I always have. But that won't include holding open houses as the seller’s agent. Probably.