I'd considered skipping this part of the party (I didn't want to buy the hat) but am glad that I didn't. Evie really thought it would be fun and it turned out to be one of the easier activities to pull off. We bought a sorting hat at Izilla's Toy Store on Capitol Hill. I read the poem from the book and then sorted each child into their houses.
I was going to put them all in Gryffindor to avoid any hurt feelings but it became clear that a few of them wanted to be in a different house. (I would quietly whisper asking each kid their preference as I leaned down to put the hat on their head.) Although by far the majority chose Gryffindor because it is Harry, Ron and Hermione's house. Evie's cousin wanted Hufflepuff but then was sad that she was the only one who chose it so we then had to resort her into Ravenclaw. It was fun to vary what I said with each kid and use the voice of the hat from the movie.