New Rules Restrict Quasi 'Open Houses'

By Dave Fratello | July 14th, 2020

All California real estate went into a form of deep freeze in the Spring as the first stay-at-home orders took effect.

The last open houses in Manhattan Beach were on the weekend of March 14-15.

Gradually, we've seen local real estate open up, then really heat up.

The "opening up" process also has spawned innovations to help buyers see property under difficult, pandemic conditions. 3D tours are now almost a requirement. Showings occur with restrictions and safety precautions.

And then, maybe you've noticed the return of the open house.

No, they're not really "open houses" as traditionally practiced. (Although, this past weekend, driving around MB, we did repeatedly see some local brokers' actual "open house" signs all around.)

The kinds of "open houses" we've been seeing are not exactly "open." There may be signs stating that showings are "occurring now," enticing people to walk up. Or there may be signs or ads specifically for "walk-up appointments" during a designated period of time. (Full disclosure: Following guidelines, we've operated "walk up" appointment events to show a listing.)

On site at these sorts of quasi open houses, people interested in seeing a house would fill out required disclosure forms, don masks and gloves, and have the opportunity to see the house.

Alas, this adaptation to the oft-changing pandemic reality may need to change again.

Monday, after hearing rumblings from state officials, the California Association of Realtors (CAR) issued statewide advice regarding open houses that is both strict and threatening, but also offers a way to thread the needle for those who will, inevitably, try.

Some highlights direct from CAR:

> "Open Houses" on a walk-in basis are still prohibited.

> All showings still require either an appointment or a digital sign-in process prior to entry.

> [I]t is recommended that no “Open House” signs be used... [I]f they are, they must also include information on the sign or a sign rider indicating that appointments or digital sign-in is required before entry.

And the association observes, as a rationale for following these guidelines: "[A]ny type of traditional open house — allowing spontaneous walk-up with no digital sign-in, appointment or adherence to protocols — would threaten the policy allowing licensees to show property." [Boldface added.]

Now, a few quick observations.

Start with the big picture. There's a pandemic, and it's not getting better.

When the state shut down in March, it took a while to declare real estate to be an "essential business."

Under this week's newest rollback, real estate presumably remains "essential."

Back in March and April, several counties adopted a strict no-showings policy for homes on the market. Real estate in those areas was only "essential" insofar as it involved finishing active transactions.

As we noted in our May 1 post ("Real Estate Still Restricted, But 'Opening,'" LA County first adopted identical language that would have prohibited property showings, and the city of LA did operate under such restrictions for spell. Later, LA County changed its own interpretation of the no-showings language and cracked the door open.

Property showings are permissible now under restrictions, but in-person showings are technically supposed to occur only when "a virtual viewing is not feasible." (Internet's down?)

In practice, there are a lot of property showings happening these days even when "virtual viewings" are, in fact, "feasible."

The market wants to work.

Quasi "open houses" stretch the opening for showings even further, with no requirement for a virtual viewing, going straight to the in-person showing.

There is definitely a fair argument to be made that in-person showings, even with "walk ups," can be done safely and in line with the guidelines that existed prior to Monday, and even within the four corners of the latest CAR advice.

Host a "walk up" event but require advance appointments, or require digital sign-in on site, and maybe you've threaded the needle.

But as CAR states, if this practice looks like an abuse, it "would threaten the policy allowing licensees to show property."

The state licensing agency told California brokers last week that they're shifting resources to enforcement against improper showings and open houses.

South Bay brokers have been advised that we could be on shaky ground in terms of insurance, if quasi open-house type events wind up not following required guidelines for disclosures, social distancing and signing of waivers.

The open house may need to go back on ice as the state rolls back "reopening" policies and the new guidance inspires more caution.

Showing procedures that involve advance appointments, adequate disclosures and on-site prep and cleaning should still be sufficient to help sellers get their properties sold.

Better to hold onto that option than risk seeing showings shut down entirely by pushing the envelope.

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