Seller Market Versus Buyer Market

Dated: 02/26/2018

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Image titleBuyer’s Market Definition

A buyer’s market occurs when the supply (available properties for sale) exceeds demand (the number of buyers seeking to purchase properties). If you’re buying a new home, a buyer’s market is the ideal time to make your move. You might be able to buy a great home for a lower cost than you would in a seller’s market.

If you’re trying to sell your property in a buyer’s market, your home may remain on the market long before you’re able to secure a buyer due to a large number of available properties. You may also have to lower your listing price or make other concessions in order to secure a buyer.

Seller’s Market Definition

A seller’s market occurs when demand exceeds supply, or there are more buyers seeking to purchase properties than there are available homes on the market. This often leads to multiple buyers interested in a single property, resulting in bidding wars. A seller’s market is a fantastic time to sell your home as you could secure a sale price that’s higher than your listing price, or at least more than your bottom line (the lowest price you’d be willing to accept for your home).

If you’re buying a home in a seller’s market, be aware that the seller has the advantage. If other buyers are interested in the same property you’re making an offer on, trying to get a lower sale price probably won’t work to your advantage. In fact, you could lose the opportunity to purchase the property altogether if a competing buyer makes a higher offer. Seller’s markets are sometimes called “renter’s markets” for this reason; sometimes potential buyers need to keep renting until they can save up a higher down payment and compete with other buyers in the market.

How to Determine If It’s a Buyer’s Market vs. Seller’s Market

The real estate market goes up and down depending on the season. There are usually a lot more homes for sale in the summer months (June - August) than any other time of year. That means that it could be a seller’s market in the winter but a buyer’s market in the summer. Whether it’s a buyer’s market or a seller’s market also depends on the area. Cities with a lot of available jobs and growing industries will often be a seller’s market, while those with struggling economies will be a buyer’s market.

One way to determine if it’s a buyer’s market or a seller’s market is to look at inventory or the number of homes for sale. If inventory is low, it is most likely a seller’s market. If the current level is below 0%, that means that there are fewer homes for sale now than during this time last year, and it could be a seller’s market in your area.

Buying & Selling in Different Types of Markets

A local real estate agent will be able to come up with a strategy for getting the best deal, whether it’s a buyer’s market or a seller’s market. If you’re selling, they’ll know how high of a price to ask for, and if you’re buying, they’ll know what you need to offer in order to compete with other potential homebuyers (or sway the homeowner to accept a lower price).

Working with an agent you trust, who won't push you beyond what you're comfortable offering or rush you into making a bad decision, is key to coming out ahead. 

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Jayson Linford

Jayson is a serial entrepreneur, author, and has had a unique understanding of why people do what they do. He is the author of the book redefining generosity the principles of which he uses to run hi....

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