Price is the talk a lot of listing agents put off the longest. And in a market full of inventory, it’s the reason a lot of listings sit.
Richard McKinney, broker-owner of REMAX Gold in Port St. Lucie, Florida, takes the dread out of it by having the price talk before the sign goes in the yard. His brokerage has grown from about 400 sales to 1,200 in four years, in a Florida market with plenty of homes for sale.
He sat down with Byron Lazine for a BAM interview and walked through the framework he uses. Here’s how the 20-20-0 rule works and how to size it for your market.
The Price Conversation Starts at the Kitchen Table
McKinney has been selling real estate since 1998. Over that time, he’s come to believe the agents with the listings are the ones best positioned to succeed in their chosen profession.
He told Lazine the work starts with teaching the seller about the market the minute the appointment begins.
“Since 1998, listers last. You have to get inventory and you have to educate those sellers in the process early on. It starts from the minute you sit down at the kitchen table. ‘What do you know about the market, Mr. Seller? This is what we’re seeing.’ Educate, educate, educate. Inform them about the process and the strategy that you’re going to implement to help them get to where they want to be.”
For McKinney, price is one part of the marketing plan. He covers it at the first meeting along with the rest of the plan.
He explained how that first conversation should sound.
“It starts at the initial listing appointment or listing conversation and that should be part of your marketing plan. ‘This is what we’re going to do. This is the process.’”
At that same meeting, he brings up the 20-20-0 rule so the seller knows when the next price talk will happen.
How the 20-20-0 Rule Works
The rule sets a checkpoint for reviewing the price. The agent and seller agree on it before the listing goes live. Lazine credits Sharran Srivatsaa with teaching the 10-10-0 version to a lot of agents.
The rule has two triggers. Hitting either one means it’s time to talk about price:
- A set number of days on the market with zero showings
- A set number of showings with zero offers
Lazine described the 10-10-0 version this way:
“if you are are on the market [with] 10 days zero showings or 10 showings zero offers, that’s when we’re going to have a price position conversation.”
In McKinney’s version, the number is 20, since he’s in a higher inventory market.
Each trigger points to a different problem. Lazine explained what it means when buyers are walking through the home and nobody makes an offer.
“If you’re getting showings and nobody’s writing, if you’re getting the average number of showings in your market, nobody’s presenting, then there’s something wrong. Is it smell? Is it condition? Is it the neighbor? Is it the location? Is it the power line?”
When nobody books a showing at all, Lazine said the market is sending a message about price.
“If there’s just no showings, there’s no interest. It doesn’t mean there’s no buyers in the market. It means that the price position is off and the market is telling us that, and we need to have a conversation there.”
How to Adjust the Rule for Your Market
The numbers in the rule can move. McKinney told Lazine the right number depends on where you sell.
“I really like the 20-20-0 rule. 20-20 or 10-10 depending. You can adjust depending on your market. And with us it’s about 20 days, you know, generally.”
He’s speaking of his part of Florida, where 20 days is the sweet spot. Lazine said agents should work out their own number from local sales data.
“…because on average you need about 10 showings to get an offer. Maybe in your market it’s 15 or 20…You do the numbers based on your local market.”
Before you set your trigger, pull these numbers from your MLS or your showing software:
- Average or median days on market (use whichever one your source reports)
- The average number of showings before a home gets an offer
- How both numbers compare with the same time last year
Your trigger should change when your market does. McKinney made this point about listing presentations, and it applies to pricing triggers the same way.
“Markets change. Agents need to change with it, evolve with it, and implement strategies that they didn’t do a year ago. Our market is completely different than it was even 18 months ago.”
What It Looked Like on an Expired Listing
A few of weeks before the interview, McKinney went with one of his agents to a listing appointment. The home’s listing had expired several months before, and other agents were competing for it.
He told Lazine how the rule helped them win the listing and sell the home.
“It was an expired listing from several months ago and she was in a competitive listing environment. And I went in there and we went over (the 20-20-0 strategy) and that’s really what got us over the hump, just educating the customer. And we were approaching the 15-day mark, and we got a nice offer and went under contract. So, it’s a lot about education. I call it pacing, leading, and guiding. And if you’re doing that, especially with a seller, the conversation’s much easier on day 20.”
The seller knew the plan for day 20 from the first meeting. And in this case, the offer came in before they got there.
Why Sellers Take the Truth Better at the Start
Lazine described what it’s like for a seller when the agent never set up a plan.
“It could be three days, it could be 13 days without a conversation around strategy and the seller’s just like, somebody asks them, ‘Hey how’s the sale going?’ ‘I don’t know. We haven’t had a showing in a few days. I haven’t heard from my agent.’ That’s a place that creates a lot of anxiety for sellers.”
McKinney said sellers handle hard news better when it comes from their agent.
“I think it’s important for the seller to hear the truth from the agent upfront instead of having the market tell them the truth eight weeks later because that stings a lot more.”
He added that sellers want the whole strategy at the first meeting, and price is part of it.
“I think that sellers would rather hear the complete marketing strategy in the very beginning. And part of that is price. In fact, in some markets, 80% of the marketing is the price. And so, if you’re doing that and you’re setting expectations up front, you’re going to sell more listings. You’re going to have a smoother process.”
Pick Your Number Before the Next Listing Appointment
You can have your own version of the rule ready for your next listing appointment:
- Pull your local days-on-market and showing numbers.
- Choose your trigger, whether that’s 10-10-0, 20-20-0 or something in between.
- Add it to your listing presentation and your marketing plan.
- Put the check-in date on your calendar the day the listing goes live.
When the seller hears the plan on day one, the day-20 conversation is a check-in they’ve been expecting.
