Buyer’s Market Vs. Seller’s Market In Real Estate

The real estate market has two opposing sides: buyers, who want to keep their costs low, and sellers, who want to maximize their profits. Depending on the inventory of available housing, one of those sides might have bigger advantages — and greater bargaining power — than the other. Understanding the difference between a buyer’s market and a seller’s market can be tied back to one of the fundamental laws of economics: supply and demand..

What is a buyer’s market?

When there is a surplus of homes and low demand for them, you’re in a buyer’s market. Prices tend to go down in these conditions, because there’s less competition. Additionally, homes are likely to stay on the market for longer, putting pressure on sellers to make concessions during the negotiation process.

Depending on which side of the fence you’re on, consider these tips for successfully navigating a buyer’s market:

If you’re a seller

Home sellers should consider the following strategies to maximize profits:

• Consider waiting: Do you absolutely have to sell your place right now? If not, you might want to delay your listing until the market shifts in your favor. 
• Make your home more appealing: Ask your real estate agent to suggest potential improvements and upgrades that might deliver a solid return on your investment. Small steps, such as hiring a home staging service, can make your home stand out. 
• Plan your timing: Talk with your agent to learn the best time of the year to sell in your specific market.

If you’re a buyer

Pat yourself on the back — you’ve chosen a good time to buy. Still, doing these things can help you make the most of the situation: 

• Take your time: Since there isn’t as much competition, you don’t need to feel rushed to make an immediate offer.
• Fine-tune your offer: Carefully research comparable properties so you’ll know how to make the right offer. Your agent can help guide you. 
• Explore your options: Even if you can’t get a seller to lower the price, you may be able to get other benefits, such as repairs and additional contingencies.

What is a seller’s market?

If the supply of homes is not enough to meet the demand from buyers, you’re in a seller’s market. Home prices tend to go up in these conditions, as buyers compete for the limited options available, and sellers are less likely to make concessions because they may receive multiple offers. Also, homes tend to stay on the market for a shorter amount of time, making it easier for sellers to close and move on.

A seller’s market can feel overwhelming for buyers, and perhaps a bit too tempting for sellers. Whichever side you fall on, these tips can help you navigate a seller’s market:

If you’re a seller

• Don’t be overconfident: You still want to make your home appealing to buyers, even if the competition isn’t as stiff. “Be diligent about preparing your home for sale,” says Holly Connaker, an agent with Compass in Minnesota. “Just because it’s a hot market doesn’t mean you should forsake purging, refreshing and normal maintenance. Buyers notice a lack of attention to detail and will wonder what else has been neglected.”
• Price strategically: You may be able to price your home on the high side, but it’s important to check comparable properties in your area to ensure you’re not asking too much. “Don’t get greedy, because it can backfire on you,” Connaker says. “If you price your home too aggressively for the condition it is in, it may not sell right away. When homes don’t sell quickly, buyers assume something is wrong with the home.”

If you’re a buyer

• Be ready to act fast: “Seller’s markets are easier to manage when a buyer is 100 percent prepared,” says Dylan Lennon, a Realtor with Keller Williams in Asheville, North Carolina. “This means having a prequalification letter ahead of time if financing is involved, being comfortable with the purchase contract so that it can be signed quickly before an offer is made and knowing what to expect during the home inspection.”
• Offer above asking price: You can bet other buyers will be doing the same. Just don’t get so caught up in a bidding war that you end up paying more than you can afford (or more than the house is worth). Additionally, be aware that your lender will likely only agree to a loan based on the property’s appraised value; if your offer is higher than that, you’ll need to come up with the difference.
• Go light on negotiations: Don’t expect to get many concessions during the negotiation process. If something in the home needs to be repaired, you may need to fix it yourself after closing.

Today’s real estate market

The hot seller’s market of the last few years has cooled, and we’re starting to approach more neutral territory. Still, home prices remain very high, and many would-be buyers have been waiting for either prices or mortgage rates to come down. But expert predictions don’t foresee significant improvement anytime soon — that could keep more buyers from the market, lessening competition while offering committed buyers certain advantages. 

Despite higher prices and a lack of significantly lower mortgage rates, there’s been recent growth in housing inventory. Data from the National Association of Realtors shows that the market had 4.2 months of inventory in October 2024, which is approaching the mark of 5 or 6 months that typically indicates a balanced market. 

A local real estate agent will be able to analyze the market in your specific area to determine who has the upper hand. Here are some key indicators to help you gauge whether your area is leaning toward a buyer’s market or a seller’s market:

• Inventory: If you’ve house-hunted in the past, compare the current number of for-sale properties with what you’ve seen before. In general, the more homes that are available, the likelier it is to be a buyer’s market. On the flip side, fewer options generally weigh in favor of sellers.
• Asking and sale prices: Compare the asking prices with the final sale prices on properties in the area that are similar to the one you’re hoping to buy or sell. If they sold above asking price, that may indicate a seller’s market, while if they sold for less, the opposite may be true.
• Days on market: The longer a home remains on the market, the more the seller may be willing to do to offload it, including reducing the price. That makes long days-on-market times indicators of a buyer’s market, whereas if homes are flying off the market quickly, it’s more likely a seller’s market.
• Local market trends: Consider the data and local housing trends. If you notice that prices have increased sharply in recent months, for instance, it could be a sign that you’re in a seller’s market. On the other hand, if prices have remained the same or gone down, buyers may have the upper hand.