Buyer’s Market Vs. Seller’s Market: What’s The Difference?

When you’re buying a house, the current housing market, which is largely based on supply and demand, can have a major impact on your experience. There are certain times when the real estate market favors buyers more, meaning you can buy a home with better contract terms. However, there are also seasons where the market tends to favor sellers.

Whether you’re shopping in a buyer’s market or a seller’s market can impact several aspects of your buying experience, including the sale price, negotiations, whether you’re likely to get any seller concessions and more.

If you’re preparing to buy a house, it can be helpful to know upfront whether it’s a buyer’s market versus a seller’s market so you know what you should expect during the process.

What Is A Buyer’s Market?

It’s a buyer’s market when the housing supply exceeds buyer demand. That means there are more homes on the market than potential buyers. In a buyer’s market, sellers are typically more willing to negotiate to attract buyer interest, and homes can sell at or below their list price.

Tips For Buying In A Buyer’s Market

If you’re lucky enough to be shopping for a home in a buyer’s market, you’ll find that things are already working in your favor. There are a few things you can do to make the most of the market and get the best deal on your new home.

• Take your time: One of the benefits of shopping in a buyer’s market is you don’t necessarily need to move as quickly. It’s often not like a seller’s market where homes sell within a day or two. Instead, you can take your time to make sure you find the perfect home rather than just try to get an offer accepted quickly.
• Research how long it’s been on the market: When you’re shopping in a buyer's market, you can be a bit pickier about the homes you look at. A buyer’s market often leads to homes sitting unsold for longer periods. If you’re looking at a home, it may be worth asking how long it’s been on the market. If it’s been on the market for a long time, it’s worth exploring why other buyers have passed on it.
• Offer below the asking price: Knowing how much to offer on a house is one of the most challenging parts of buying. When it’s a buyer’s market, homes often sell for less than their asking price. There’s less competition for homes, and you’re less likely to end up in a bidding war with multiple buyers. By starting with a lower offer, you leave room to negotiate so that even if there is a bidding war, you still get a favorable price.
• Ask for seller concessions: A seller concession is a cost the seller agrees to cover that would normally be the buyer’s responsibility. One of the most common seller concessions is help with closing costs, but you can ask for other concessions as well.
• Request repairs: If you’re buying a home in a buyer’s market, you may be able to ask the seller to make certain repairs or improvements as a part of the deal. Some improvements may be functional, such as fixing a hole in the wall or something that’s broken. But depending on the market, you may even be able to ask for cosmetic repairs.

Tips For Selling In A Buyer’s Market

Unfortunately, selling your home in a buyer’s market is a bit more challenging. Let’s talk about a few steps you can take to make the process go a bit more smoothly.

• Get a pre-inspection: When someone makes an offer on your home, they’ll want an inspection to find out if there are any issues with the home. It may be worth getting your own inspection before listing the house. That way, you’re aware of any issues upfront and can fix them before putting the house on the market.
• Budget for concessions: If it’s a buyer’s market, you should expect that you’ll have to give a bit more in the negotiation process. Consider budgeting for seller concessions ahead of time. If a buyer asks for seller concessions, you already have the money to cover them. And if they don’t, then you have a bit of extra money in the bank.
• Stage and deep clean: It’s your job as the seller to make your home as appealing as possible for prospective buyers. If it’s in your budget, make the investment to have your home deep-cleaned and professionally staged. These steps can go a long way in bringing in more buyers.

What Is A Seller’s Market?

In a seller’s market, there are more buyers than homes available. The seller has the advantage in this market and will likely experience bidding wars between buyers. In a seller’s market, homes usually sell fast and for more than their asking price.

Tips For Buying In A Seller’s Market

When you’re buying a house in a seller’s market, you should expect the process to be a bit more challenging. You are likely to pay more, and it may take longer to have an offer accepted. There are steps you can take throughout the process to make it a bit easier on you.

• Get preapproved: Getting preapproved before making an offer is helpful in any housing market, but it’s critical in a seller’s market. Not only does it help you determine how much you can afford to spend, but providing a preapproval letter with your offer shows sellers that you’re serious and ready to buy.
• Find the right real estate agent: It’s possible to buy a home without an agent, but an agent is particularly beneficial during a seller’s market. They know the local market and other agents in the area. They also know which offers are getting accepted in the current market and which ones aren’t, meaning they can help you craft the right one.
• Act fast: Houses tend to sell more quickly in a seller’s market. If you find the perfect home, you’ll need to make a decision quickly. Many homes in a seller’s market have offers accepted within a day or two of going on the market.
• Make a strategic offer: During a seller’s market, sellers can be pickier about which offers they accept. It’s common for people to offer over the asking price. Making a low offer or asking for many concessions or contingencies may cause your offer to be turned down.
• Prepare for a bidding war: Bidding wars are common in a seller’s market. Many people may make an offer on the same home, and the seller may ask buyers to increase their offers to stand out from the crowd. A bidding war could price you out of a house, so keep that in mind when deciding which homes to make offers on.

Tips For Selling In A Seller’s Market

If you’re trying to sell your home during a seller’s market, you’re in luck. You can expect your home to sell more quickly and at a better price. Here are a few ways to make the most of the seller’s market:

• Price fairly: No matter what kind of market you’re selling your home in, it’s important to price your home fairly and at the fair market value. However, you can expect that people will offer more than your asking price and that a bidding war might drive the sale price up even more.
• Compare offers carefully: During a sellers’ market, you’re likely to get more offers than you would in a buyer’s market. It’s important to know what to look for in an offer and how to choose the best one. If you’ve hired a real estate agent, they can help you separate out the best offers.
• Prepare for contingencies: You’re likely to get fewer contingencies in offers during a seller’s market, but you’ll almost certainly get some. For example, people are still likely to ask for appraisal contingencies, inspection contingencies and more. It’s up to you whether you consider offers with these contingencies. It may be in your best interest to choose an offer with fewer contingencies attached to it.
• Plan for your next home: If you’re selling your home, then you’re also planning a move — and may even be buying a home yourself. In this case, you also have to contend with the seller’s market as a buyer. You’ll probably have an easier time selling your current home than buying a new home, so have backup plans in place.

How To Determine Whether It’s A Buyer’s Or A Seller’s Market

Whether you’re buying or selling your home, it’s important to understand upfront whether it’s a buyer’s or a seller’s market. Your real estate agent can typically tell you which it is, but there are also a few indicators and current market conditions you can look at to help you understand:

• Home price trends: Are home prices generally rising or falling? Rising prices can indicate a seller’s market while falling prices can indicate a buyer’s market.
• Recent sale prices: Have homes been recently selling above or below their asking prices? If homes are selling above their asking prices, you’re probably in a seller’s market. If they’re selling below their asking prices, it’s probably a buyer’s market.
• Number of days on the market: What is the average number of days a home is staying on the market? The longer the time on the market, the more likely you’re in a buyer’s market. In contrast, the shorter the time on the market, the more likely it’s a seller’s market.
• Home inventory: Is the current housing inventory higher or lower than it has previously been? If there’s a large inventory, it’s generally a sign of a buyer’s market. On the other hand, a small inventory is indicative of a seller’s market.

Buyer’s Vs. Seller’s Real Estate Market: At A Glance

The table below summarizes the key characteristics of a buyer’s market versus a seller’s market. These characteristics allow you to see the differences between the two easily and can help you determine which you’re currently in.

The Bottom Line

When you’re buying or selling a home, the current housing market will have a significant impact on how the process goes. In a buyer’s market, there are more homes than there are buyers. Homes often sit on the market for longer periods and sell for less than their list prices. On the other hand, a seller’s market often comes with a small housing supply, fast sales and high sale prices. Knowing which kind of market you’re in can help you navigate the process better.

If you’re ready to buy your dream home, we can help. Start on a mortgage application today!