Skip to main content

Buyer’s Market vs. Seller’s Market: The Difference and How To Navigate Both

5 minute read

By Katie Ormsby

Before buying or selling a house, you’ll want to understand the current power dynamics in the housing market. The market has two opposing sides: buyers and sellers. Depending on factors like supply and demand, one side has the upper hand.

Understanding where the market is can help you devise a strategy to buy or sell a house. Let’s take a closer look at both types of real estate markets and explore how buyers and sellers can make either situation work for them.

What’s a Buyer’s Market?

In a buyer’s market, Rocket Homes says, “the number of available homes is greater than the number of potential buyers.” In other words, the current housing supply exceeds the demand from buyers.

When this happens, houses typically sit on the market for longer amounts of time. Bidding wars are unlikely, and sellers who don’t want to wait out the market may decide to reduce their asking price.

Buyers have the advantage during this type of market. For instance, they tend to have more houses to choose from and greater negotiating power. That can result in getting more bang for their buck.

Shutterstock

What’s a Seller’s Market?

While sellers can have difficulty moving their homes in a buyer’s market, that isn’t the case in a seller’s market. As you might expect, a seller’s market occurs when the demand for housing exceeds the supply.

“In a seller’s market,” Assurance Financial says, “houses sell faster than average, requiring more buyers to compete with one another to secure a property.” As a result, sellers have the upper hand and may benefit in a few ways.

For instance, buyers may enter bidding wars with each other, driving the final price significantly over the asking price. Additionally, buyers may be quick to forgo inspections and accept properties as-is.

Shutterstock

How To Tell if It’s a Buyer’s or Seller’s Market

An experienced real estate agent can help you determine whether you’re in a buyer’s market or a seller’s market. But Experian says there are some indicators you can use to figure out the state of the market:

  • Average home price trends
  • Whether homes sell for more or less than asking prices
  • Length of time houses remain on the market

If average home prices are trending down, houses are sitting on the market longer, and homes are selling for less than the asking prices, then it’s a buyer’s market. If the opposite is true, then it’s a seller’s market.

Shutterstock

Buying in a Seller’s Market

Just because the market isn’t in your favor doesn’t mean you have to wait for the tides to turn. However, you’ll want to prepare yourself. Since competition is high, buyers should be ready to act fast.

With this in mind, you may want to get mortgage preapproval from a lender. You’ll also want to keep up with the latest real estate listings because houses sell quickly. Offers may roll in on the first day.

Additionally, buyers in a seller’s market may face bidding wars. That’s why it’s a good idea to figure out the max price a particular house is worth to you in order to avoid getting caught up in the moment.

Shutterstock

Selling in a Seller’s Market

If you live in a hot housing market, then it could be a good time to sell. But that doesn’t mean sellers don’t need a strategy to reap the benefits of a seller’s market. For one thing, you’ll still want to take some time to put your house in the best possible light.

After all, a spruced-up house may be more likely to attract high offers and spark a bidding war. Also, you can use your upper hand to take your time reviewing offers carefully. In addition to price, consider things like contingencies and whether it’s a cash offer.

Shutterstock

Buying in a Buyer’s Market

Much like selling in a seller’s market, buying in a buyer’s market is ideal. Similarly, you’ll still want to keep a few things in mind to get the most out of the situation. Since you have the upper hand, you can take some time to consider your options and view many houses.

In a buyer’s market, buyers have negotiating power. That means you may be able to negotiate the price and closing costs. And you may be able to request updates like a new roof. However, excessive demands may sour the seller. So, keep that in mind if you love the house.

Shutterstock

Selling in a Buyer’s Market

Since buyers have the advantage in a buyer’s market, sellers will want their homes to stand out. For starters, you may want to take sprucing up your home to the next level.

A fresh coat of paint, well-maintained planters, and new light fixtures can enhance your home’s curb appeal. Inside, remove personal items and stage each room.

It’s also important to set an asking price that’s realistic. An experienced real estate agent can help you determine a competitive asking price for the state of the market.

Getty

Factors That Affect the Housing Market

Several factors can influence the housing market. For example, the time of year can make a big difference. Generally, more homes hit the market in the summer than in the winter. So, buyers are more likely to have choices during the summer months.

The economy is another influential factor. If interest rates are low, then buyers may face more competition. That can lead to rising prices and quick sales, which can benefit sellers. Things like the school district and nearby amenities can also affect the market.

Shutterstock

Buyer’s Market vs. Seller’s Market in a Nutshell

Now that we’ve covered the difference between a buyer’s market and a seller’s market in detail, you may want a cheat sheet for reference. That way, you can quickly identify the characteristics of both types of real estate markets.

Typical Features of a Buyer’s Market:

  • A lot of homes are on the market
  • Home prices are falling
  • Homes sit on the market longer

Typical Features of a Seller’s Market:

  • Not many homes are on the market
  • Home prices are rising
  • Homes sell quickly after hitting the market

Getty

The Bottom Line

The state of the housing market changes over time as supply and demand fluctuate. If you want to buy, but it’s a seller’s market, then you might want to wait it out. And vice versa. However, you might not have the luxury of being able to put buying or selling on hold.

Understanding the difference between a buyer’s market and a seller’s market can help you navigate a housing market that’s less than ideal for your situation. Even if you’re selling or buying at the ideal time, strategy can help you maximize your advantage.

Shutterstock

Key Takeaways

  • Common indicators of a buyer’s market include slow home sales and lower home prices.
  • A seller’s market, on the other hand, is characterized by quick sales and rising prices.
  • Buyers and sellers can navigate either scenario with a few helpful tactics and strategies.

Katie Ormsby

Contributor

Explore

How to Start Flipping Houses (And Actually Make Money) Flipping Houses Home Ownership

How to Start Flipping Houses (And Actually Make Money)

House-flipping is often portrayed as a foolproof path to quick riches. While this inaccuracy can create unrealistic expectations, flipping houses can definitely be profitable if you do it right. And that’s the trick: the people most successful at flipping houses are generally the most experienced. That said, they all started somewhere. There’s nothing like completing […]

Read More about How to Start Flipping Houses (And Actually Make Money)

6 minute read

How Your Rental History Might Finally Help You Qualify For a Mortgage Young couple moving into their first house Home Ownership

How Your Rental History Might Finally Help You Qualify For a Mortgage

Even if you previously had a mortgage application rejected, you may want to try again. Fannie Mae recently announced changes to their underwriting process. The new calculations will include your history of rental payments. That’s great news for anyone that’s been a reliable tenant for years while saving for a house. This new process should […]

Read More about How Your Rental History Might Finally Help You Qualify For a Mortgage

3 minute read

How To Redecorate Your House On a Budget young couple redecorating a house Home Ownership

How To Redecorate Your House On a Budget

I’m not sure if it’s because everyone has been stuck inside due to the pandemic or just a coincidence. Whatever the reason, it seems like everyone I know has recently been updating their homes. Whether it’s a minor or major redecoration, all this time indoors has spawned a bunch of amateur interior designers. If you’ve […]

Read More about How To Redecorate Your House On a Budget

7 minute read

Should You Buy A House In This Market? 11 Things To Consider Family buying a new house Home Ownership

Should You Buy A House In This Market? 11 Things To Consider

With record low interest rates and a once in a lifetime (hopefully!) pandemic forcing so many to stay home, the past year was the perfect time to become a homeowner for the first time. Or just to move into a new house. Now though, home prices are sky high and the market is red hot […]

Read More about Should You Buy A House In This Market? 11 Things To Consider

9 minute read

Steps Every Millennial Needs To Take Towards Buying a House Steps For Buying A House Home Ownership

Steps Every Millennial Needs To Take Towards Buying a House

Wages are low. Real estate prices are exploding. The economy remains stale (and unemployment is up) in the wake of a major global pandemic. For many millennials, the dream of owning their own home seems to be quickly fleeting. No matter what you do, it might seem like you’re never getting any closer to being […]

Read More about Steps Every Millennial Needs To Take Towards Buying a House

7 minute read

Can You Afford that House? The 30% Rule, Explained Home Ownership

Can You Afford that House? The 30% Rule, Explained

When shopping around for a home, one of the first questions you should ask yourself is how much house you can afford. Understanding whether or not you can afford a specific mortgage payment — and the rest of the costs that come with home ownership — is a necessary part of the process. Make sure […]

Read More about Can You Afford that House? The 30% Rule, Explained

8 minute read

14 Worst Home Buying Mistakes | Rookie Mistakes in Home Buying Home Ownership

14 Worst Home Buying Mistakes | Rookie Mistakes in Home Buying

It’s a well-known joke that basically every real estate agent will always tell you that now is a great time to buy a house. Apparently there’s literally never a bad time. However, with mortgage rates currently at truly historic lows, those realtors may be right. If you’re ready to take the plunge, we’re here to […]

Read More about 14 Worst Home Buying Mistakes | Rookie Mistakes in Home Buying

10 minute read

What To Do If Your House Hasn’t Sold in a Year House with For Sale Sign Home Ownership

What To Do If Your House Hasn’t Sold in a Year

We keep hearing that the housing market is going gangbusters in this pandemic. However, knowing that things are generally really good is cold comfort if you’ve been waiting around for your house to sell. Believe it or not, some people wait over a year for that shiny red “SOLD” sign to go up on their […]

Read More about What To Do If Your House Hasn’t Sold in a Year

5 minute read

See all in Home Ownership