Property Grunt

Wednesday, March 30, 2005

Extreme Open Houses

According to this article the newest trend to hit the real estate scene are EXTREME OPEN HOUSES, a term created by those buzz making writer of Unique Homes magazine, are enormous productions that showcase the home through means more inclined for Seigfried and Roy.

Beginning in Las Vegas and New York, this trend of ingratiating guests with gourmet food and celebrity appearances has now touched down in Boston and has spread across the country faster than Paris Hilton’s hacked T-Mobile.

The concept is spreading to the nation's suburbs, where brokers do everything from staging garage sales and charity events to inviting decorators to offer suggestions. In Natick recently, Coldwell Banker agent Maribeth Boisvert hired caterers to whip up appetizers at a home being marketed for $1.02 million to show it is well-laid out for entertaining. ''You've got to make it fun," she said.

There are a couple of points that I found interesting in the article

At a Manhattan penthouse being sold by Donald Trump, a so-called ''psychic psychiatrist" performed what she called ''energy healings." The Donald also made an appearance at the invitation-only affair.
The party-like atmosphere adds flair to a stale property, buzz to a pricey place, and puts a tough sell in a new light.
''It puts energy and attention on to a place," said Wendy Sarasohn, a Corcoran Group broker who favors the approach, and who organized the Trump event.

This smoke and mirrors approach is a brilliant tactic used in sales albeit not often. But when you create an environment of joyous communion, buyers become gleeful about the product and any type of common sense or guard goes out the window.
This reminds me of a segment that aired several years ago on 20/20 that reported that strip clubs were being used as places for legal business transactions. After a couple of drinks and some table dances, the Champagne room becomes the boardroom where business parties engaged in the art of commerce. A key advantage was that one party could use the atmosphere of the strip club to get a better deal. After all, it would be difficult for any man to focus on the business at hand while being a pair double Ds are shoved in his face.

By no means am I comparing an extreme open house to a strip club however the same principles are being utilized. Brokers are creating a euphoric feeling of a home through the use of food, libation and entertainment, which makes buyers more susceptible to buy the home. It also makes the buyers feel more special.

Nathan H.D. Gordon, feels protective of his childhood home and was somewhat uncomfortable with opening it to the public, but concedes the event may have been a necessary, perhaps even clever, way to market it.
It was ''more selective," he said, and did ''not let the riffraff see the house."

People always want something they can’t have. However pulling these events off are not cheap.

She spends as much as $10,000 on her events, a good investment in her image as a broker doing all she can to help clients sell. Of the three dozen extreme open houses she's organized over the past 15 years, she said, about 70 percent of the properties sold as a result.

I’m a believer. By no means do I do condemn this method of marketing. In fact I have been to similar events in Manhattan. And buyers aren’t that stupid to be won over by Cristal and caviar. However an extreme open house can not only the sell but create buzz about the property and the broker in charge. Sell by any means necessary is the code of any successful broker.

However I forsee a darker side to this trend.

Karl Case, a Wellesley College economics professor, said brokers may be spending on extreme open houses because Greater Boston homes are no longer selling themselves. ''People are nervous," he said. ''There's all this talk about the housing bubble. Having said that, people have been talking about this bubble for three years."

Which brings me to Wal-Mart. After last year’s Thanksgiving holiday Wal-Mart posted their worst sales record compared to previous years and had to rethink their strategy before the end of the season. Wal-Mart initiated a full court press including a marketing blitz of sales and advertising resulting in a sales comeback.
One of the tensions of opposites with business is that when sales are poor it is instinctive to cut your losses however the appropriate action is to take the offensive, attack and carpet bomb your customer base with marketing and advertising. It’s all about the perception and creating a new reality for the consumer rather than letting the numbers get in the way. Unfortunately companies often implement cutbacks especially with advertising during the lean times.

Even though an extreme open house is tantamount to a wedding at the St Regis, it increases the chance of selling the property when the usual channels are ineffective. These Wal-Mart level sales tactics are proof that brokers and buyers know the clock is ticking and they better make the best of the feast and leave before the check arrives. That means any property that hasn’t moved, is going to get the lipstick on the pig treatment even if the pig is a Victoria’s secret model.

Treat this as another indication that the end is nigh folks. So let’s be careful out there.