Low inventory, bidding wars and high interest rates are complicating real estate transactions, requiring agents to bring high-level negotiation skills to the bargaining table. It’s an acumen that, understandably, only becomes better with experience. Having closed more than 1,000 deals, Realtors Adam and Tabitha Murphy have plenty of practice.
While they admit different strategies are employed when negotiating for opposite sides of a transaction, the motivation is always the same: instill confidence in clients.
“You want to ensure that they feel secure in their decisions,” says Adam, team lead for buyers, and Tabitha, team lead for sellers, of The ATM Team with Berkshire Hathaway HomeServices in Oak Park. The husband-and-wife duo caution that effective negotiation requires adapting strategies to meet the market where it’s at, discerning clients’ desires and identifying the opposite party’s key priorities with the aim of fulfilling them.
How all that plays out at the transaction table depends on the client’s unique and ever-changing circumstances. Every deal is different. Through it all, competence and confidence — the hallmarks of a strong negotiator — separate the dealmakers from the deal-breakers. Here’s how to develop both and make a lasting impact on clients’ financial futures.
Gauge the market
In a constantly fluctuating market, Tabitha uses the Private Listing Network (PLN) as a “negotiation tactic” to preview the market’s response to a listing.
“If you have multiple agents reach out for a PLN showing, you know you’re on the right track,” she says. “The most motivated buyers are looking on the PLN. They have already aligned with an agent, made it through the current inventory and are waiting for the newest properties to come on the market. To have those buyers give feedback for the listing side is paramount.”
But she cautions: Read between the lines to determine if the listing price is too high or if buyers are anxious to make an offer too low.
Karen Mason, a senior broker with @properties Christie’s International Real Estate in Glencoe, uses the PLN-preview strategy. But she advises agents not to schedule showings until the property’s listed on the open market, and when they do, to be strategic about it.
“List it just before the weekend, and cluster showings during a short window each day,” Mason says. “Buyers will see the demand for the property, which will make them more interested and feel a sense of urgency.”
Seller-side strategies
To help sellers “net” the most from their sale, Tabitha advises negotiating the commission for the buyer’s agent first, a tool resulting from the 2024 NAR settlement agreement.
To illustrate, imagine a buyer requests $20,000 off the list price, Tabitha explains. The seller agrees, but only on the condition that the buyer pays their agent’s commission at closing. In many cases, the buyer would prefer to increase their offer price so as to cover their agent’s commission, therefore netting the seller more now than they would have prior to the NAR settlement.
“In the past, we may have come off the price and taken a significantly lower net when considering that the buyer-agent’s commission was not being negotiated,” Tabitha explains. “Now we can net a higher price by negotiating buyer-agent compensation as part of our strategy.”
At the end of the day, Tabitha says, the seller doesn’t save money just because they’re not paying the commission for the buyer’s agent. They also save money because a lower purchase price results in lower transfer taxes and other closing costs based on the purchase price.
What exactly makes a strong negotiator? In Mason’s experience, it’s strategy. “Timing and leverage are everything for sellers,” she says. “Timing is deciding when to list, when to set offer deadlines and when to respond. Leverage is making sure the home is staged, cleaned and repairs are completed before it goes to market.”
Moreover, Mason clearly defines her clients’ goals so she can communicate them to the buyer’s agents when they ask, “What’s the seller looking for in price, closing date or terms?” She also provides a list of improvements made to the house since they owned it and features that show value and support the asking price.
Mason recently represented sellers who strategically had a home inspection done prior to the property going on the market. “They made the necessary repairs and offered the inspection report to any buyer that wanted to see it,” Mason says. “We received multiple offers, one being the highest price and with an inspection contingency waived because of the inspection report we provided in the beginning. It was a cash deal, so no contingencies for my seller.”
Compare offers
Once offers start to arrive, broker Phyllis Smith with Century 21 Circle in Lincolnwood looks for the best offer with the least amount of risk for sellers. That means offers without home sale contingencies and preferably with terms like “no inspections” or “as-is with no request for credits.” Next, she seeks a closing date that meets the seller’s needs and does not require them to move into temporary housing. A strong preapproval letter or proof of funds if it is a cash offer are other essential must-haves. Even so, she verifies the documents with the lender that issued them, because she wants to know where they are in the process.
“Have they pulled credit? Verified income? I want to know that they really vetted them well,” Smith says. “Not all lenders do, and I do not want any surprises later. I always trust but verify.”
Smith also calls agents to thank them for the offer and answer any questions. In today’s market, though, she tells sellers to wait a couple of days before accepting an offer so as to further test the market and ensure it’s the “highest and best” one.
Mason emphasizes it’s important for listing agents to be up to date on comps, neighborhood trends, property details and contract terms.
“You need to back up your position with data and market insight,” Mason says. “Accepting the best offer is about getting the seller the best price and terms, as well as lowering their risk while they take the house off of the market.”
Tabitha recommends simplifying the process of comparing multiple offers by creating a spreadsheet that shows all the terms of the different offers, along with how they compare to one another and meet the seller’s needs. “It’s extremely beneficial to our team to compare terms across the spreadsheet, such as buyer-agent’s commission, net-price to seller, financing, closing date and inspections. It’s not just about the purchase price they’re offering” she says.
Stand out from the crowd
Adam says to successfully negotiate multiple-offer situations, prioritize terms that benefit sellers, such as a price escalation rider.
“It’s an addendum that states the buyer is willing to increase their offer by a set amount over the next highest competing offer, up to a specified maximum purchase price,” he explains.
Another attractive term is an appraisal gap waiver, an addendum that outlines how much of a shortfall between the appraised value and the contract price the buyer is willing and able to cover. A rent-back agreement, which allows the seller to stay in the home for a set time after closing, also caters to the seller’s needs. Sometimes first-time buyers worry about coming up short on cash at closing, Adam says. He overcomes that concern by suggesting they lower their down payment to increase the cash available to cover closing costs.
Other ways to structure winning offers include being consistent and accurate, Smith says. For example, when representing sellers, she has seen buyers preapproved for a 20% down payment submit offers with a 10% down payment — an inconsistent and inaccurate move likely to eliminate their offer.
In multiple-bidding situations, if possible, Smith advises buyers to include in offers the term “as is with no request for credits” or risk not getting the home. “Buyers always have the option of walking away after inspection,” she says. “So, if they need to walk away, they can.” She also encourages buyers to put down 5% earnest money to let the seller know they are “all in.”
Still, she always balances the terms necessary to secure the property with the buyer’s ability to meet them.
“I’ve seen agents push their buyers into situations that they are really not prepared for, and that’s a disservice,” she says. “It’s not always about getting the house clients bid on; it’s about getting the best deal that works for them.”
In today’s market, where the asking price is the opening bid and offers tend to exceed it, Smith makes sure buyers understand that the seller may choose one of the other offers and not come back with a counteroffer. In those instances, she tries to help clients understand and accept that if a house sold for more than they can afford, “it just wasn’t in the cards.”
Come out on top
Mason recently represented buyers competing against cash offers in a multiple-offer situation and won, despite the client’s not having proof of funds. She says it was due to the lender’s discussing with the listing agent multiple times how strong the buyer was. Plus, she tailored the offer to meet all the seller’s needs, including an appraisal gap waiver.
Adam recently won a bidding war, even though his buyer’s offer was $15,000 below the next highest offer, because of the “confidence factor.” He says he earns that confidence by establishing a connection with the listing agent during a warm introductory phone call. At that time, he discovers what’s important to the seller and includes those terms in the offer.
“When a property has 10 offers, all over asking price, the winning bid often isn’t just about the number — it’s about the terms and the way the offer is presented,” Adam said. “In competitive situations, it’s just as important to build rapport with the listing agent as it is to submit a strong, well-structured offer.”
Leaving nothing to chance, he always follows up with a phone call to the listing agent to highlight what makes the offer strong. He recommends other agents do the same, because newer listing agents especially may not have the experience needed to differentiate strong offers from weak ones.
Recognizing that the process is just as stressful for the seller as it is for the buyer, Mason advises agents not to take on their clients’ stress or share their perspectives.
“There’s a reason why the agent is important to the deal,” she says. “You are a middleman. You are here to get the deal done and move it forward. The best way to do that is in a professional and friendly way so both parties want to work together.”
In a recent multiple-bidding situation, Smith’s relationship with the listing agent put her offer at the top, even though the offer was similar to another one. “I dealt with her before, and she knew I was on top of things and making sure that this deal would close without aggravation to her or to the seller,” Smith recalls. “So, she encouraged her seller to take my client’s offer, and they did.”
Smith believes that an agent’s reputation and behavior can have a positive or negative impact on their clients. “It’s like my mother always said: ‘Don’t spit in the soup. You may have to drink it.’”
Most recently, she saw a client with another agent on a showing. She kept quiet, but the client called and asked to continue working with her. Smith agreed, and after closing, she chose to split her commission with the other agent. “Sometimes it costs you money but helps you in the long run,” Smith says, noting the agent later referred her to a seller, and it resulted in “a nice deal.”
Learn how to negotiate
All the agents agree that strong negotiation skills come with practice. To gain it, they recommend joining a team, shadowing a top-producing agent, earning industry designations in negotiations and participating in continuing education webinars.
Living their tagline, “Our volume speaks volumes,” Tabitha and Adam always pay attention to the different strategies agents use to close deals and add the most effective ones to their playbooks. “Real-world examples are the best to learn from, because the market is ever changing,” Adam says. “You have to be involved in a lot of transactions to feel confident.”
EXPERT SOURCES
Karen Mason
@properties Christie’s International Real Estate
Adam and Tabitha Murphy
The ATM Team with Berkshire Hathaway HomeServices
Phyllis Smith
Century 21 Circle