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Buyer’s Market vs. Seller’s Market: What’s the Difference?

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The balance of supply and demand determines whether we’re in a buyer’s market or a seller’s market. Homebuyers have their pick of the lot when many homes are available and there are few other competing buyers. This means it’s a buyer’s market; buyers have more choices and can demand lower prices. The reverse situation — a lot of buyers and very few homes — means it’s a seller’s market.

What is a buyer’s market?

A buyer’s market means that there is a large inventory of houses for sale. With so many options, buyers have negotiating power. Sellers may reduce their asking prices and make more concessions to attract potential buyers.

Tips for buyers in a buyer’s market

  • Don’t be in a hurry: Because you’re not competing with other buyers, you shouldn’t be in a rush to close the deal. It’s not likely that a property you’re interested in will be picked up by another buyer quickly, and a house that you like more could pop up on the market.
  • Check out your choices: Take a look at what’s available and tour as many houses as you’re interested in to get a good feel for what you want. Cross compare your finalists.
  • Ask for concessions: Sellers may be willing to make repairs or cover closing costs. Ask your realtor for guidance. The number of days a house spends on the market can be a big factor — the longer it’s been on the market, the more likely the sellers are willing to negotiate.

Tips for sellers in a buyer’s market

  • Price competitively: You don’t want to over- or under-price your home. Look at similar houses and their prices to see what you’re competing against.
  • Repair and clean: Now is the time to replace that cracked window or leaky faucet. Get your home ready to sell; wipe away the dust and pick up all of your personal things. You want to make it easy for potential buyers to imagine themselves living in the space.
  • Get professional photos and consider a stager: Consider hiring a professional real estate photographer and even a stager who can update your decor and make your house look its best — both in photos and in person. Consider these costs as investments.
Buyer’s market or seller’s market, why does it matter?
The type of market matters because it changes how you should approach the process of buying or selling a house.

What is a seller’s market?

In a seller’s market, there are few houses and many buyers. This means sellers can price their homes higher, pass on offering concessions and expect to quickly close on a deal.

Tips for buyers in a seller’s market

  • Do your research, but move fast: Get to know the market, figure out what you want and have a mortgage preapproval ready, so that when the right home comes up, you’re in a prime position to make an offer and snatch it up.
  • Don’t sweat the small stuff: Buyers are at a disadvantage in a seller’s market. Don’t push hard for repairs, concessions or specific deadlines unless you’re willing to risk the sellers choosing a different buyer.
  • Don’t get discouraged. You may have some offers rejected, but be patient and wait for a good option to pop up. Don’t buy a home you don’t like just because it’s what’s available and, on the flip side, don’t get caught in a bidding war. Rely on your real estate agent to help you. After all, a home is typically a long-term investment.

Tips for sellers in a seller’s market

  • Examine offers closely: In the heat of the moment, buyers might make offers they can’t afford and their financing could fall through before pen hits paper, forcing you to put your house back on the market and restart the process. Ensure buyers are preapproved for a mortgage.
  • Make sure the price is right: You don’t want to miss out on value, nor do you want to discourage potential buyers by incorrectly pricing your home.
  • Tidy the house: Even in a seller’s market, a clean, nice-smelling house can get buyers’ attention and perhaps earn more competing offers.

Is it a buyer’s or seller’s market?

While there can be local exceptions, the current U.S. residential real estate market is a seller’s market. Here’s how you can tell:

Home sales prices

If home values keep going up, it’s a seller’s market. If they keep going down, it’s a buyer’s market.

Time spent on the market

If houses are staying on the market for only a couple days, it’s a seller’s market. If they’re staying on the market for weeks or even months, it’s a buyer’s market.

Seller incentives

If most houses are sold without incentives, it’s a seller’s market. If sellers are offering plenty of credits and concessions, it’s a buyer’s market.

Housing inventory

If there aren’t a lot of houses available for sale, it’s a seller’s market. If there are lots of “for sale” signs in multiple neighborhoods, it’s a buyer’s market.

 

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