Buyer’s Market vs. Seller’s Market: What Does it Mean for You?

As you begin the homebuying or selling process, it’s important to know what’s going on in the housing market. The housing market can easily impact your buying decisions, selling strategy, and planning for negotiations. So, it’s important to know if it’s a buyer’s market or a seller’s market.

In this Redfin article, we’ll outline what it means to be in a buyer’s market vs. a seller’s market and what real estate trends to look for. Whether you’re buying a home in Colorado Springs, CO, or selling your house in Louisville, KY, here’s what you need to know about both markets. 

Key takeaways

• Buyer’s market: When home supply is greater than demand.
• Seller’s market: When demand is greater than the home supply.
• Market conditions fluctuate throughout the year and from region to region.

What is a buyer’s market?

A buyer’s market occurs when the supply exceeds demand. In other words, there are more available homes for sale than the number of buyers looking to purchase homes. As a result, buyers have more leverage since there are more homes for sale than interested buyers.

What does a buyer’s market mean for you?

For buyers: Typically, home prices decrease and homes tend to stay on the market longer. If you’re buying a new home, a buyer’s market is the ideal time to make your move. You may be able to buy a great home for a lower cost than you would in a seller’s market. Sellers may be more likely to accept a lower price for their home or negotiate offers.

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

What is a seller’s market?

A seller’s market occurs when demand exceeds supply. So, there are more buyers looking to purchase homes than there are available homes on the market. As a result, sellers have the upper hand. 

What does a sellers market mean for you?

For sellers: Homes typically sell faster, which leads to multiple buyers interested in a single property. This can result in bidding wars or buyers offering higher than the home’s list price. A seller’s market is a fantastic time to sell your home. You may be able to sell your home for more than your listing price.

For buyers: If you’re buying a home in a seller’s market, know 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. 

You could lose the opportunity to purchase the property altogether if a competing buyer makes a higher offer. Seller’s markets are also sometimes called “renter’s markets.” This means 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 or seller’s market

Real estate inventory: 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. Look at the current housing market to determine if it is a buyer’s market or a seller’s market in your area. 

Pricing: Another way to determine market conditions is by the home’s asking price. When looking at listings you can see if the price has changed or if it’s stayed the same. If a home has had a price drop, it’s possible it’s a buyer’s market. However, some buyers price their homes unrealistically, so make sure to look at a variety of properties.  

Recent sales: Check to see how many homes have recently sold and what price they sold for. Make sure to look at comparable homes with similar features, number of bedrooms and bathrooms, and location. If many homes have sold above the list price, it may be a seller’s market. If many homes have sold below the list price, it may be a buyer’s market. 

Days on the market: The amount of time a home has been on the market can be an easy indicator of the current market. If homes are on the market for months, it may be a buyer’s market. However, if homes are sold in days or a few weeks, it may be a seller’s market.

Interest rates: If interest rates are high, it may be a buyer’s market. Lower interest rates can signal a seller’s market, with more buyers entering the market. 

Market trends: The real estate market goes up and down depending on the season. There can be more homes for sale in the summer months (June – August) than at other times 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.

Tips for a buying and selling in a buyer’s market

If it’s a buyer’s market, there are tips to help both buyers and sellers navigate the process. 

5 tips for buyers in a buyer’s market

1. Don’t rush: As a buyer, you typically have more power during a buyer’s market. Therefore, you can take your time touring homes. You’ll face less competition and are less likely to lose out on a home.

2. Tour many homes: In a buyer’s market, you don’t need to make an offer on the first home you like. You have the opportunity to tour lots of homes and find the right one to make an offer on. It can also help you negotiate if you know what types of homes are on the market.

3. Analyze comparable properties: Comparable properties, aka “comps,” are recently sold homes in an area with similar characteristics to the ones you’re looking at. Knowing what similar homes were priced can help you determine what to negotiate.

4. Leverage time on the market: The longer a home is on the market, the more you can negotiate with the seller on a lower price. The seller may be more likely to accept a lower offer if their home has been on the market for a considerable amount of time.

5. Consider seller concessions: Another point to consider is asking for seller concessions. Seller concessions include covering certain closing costs, asking for a different closing date, or including additional appliances in the home. 

4 tips for sellers in a buyer’s market

1. Make repairs and improvements: Small improvements and repairs can go a long way to make your home more attractive to potential buyers. Consider replacing any faulty lightbulbs, applying a fresh coat of paint, or replacing any chipped tiles. Since buyers have an advantage, they may be pickier with your home’s details.

2. Declutter your home: Decluttering and depersonalizing your home can make a huge difference when potential buyers tour your home. They can better see themselves living in the home and visualize the space’s potential.

3. Invest in marketing: Marketing your home properly can help attract buyers in a slow market. Have professional photos taken, consider having the space staged – especially if you have dated furniture, and use your network of people to spread the word.

4. Price the home competitively: Understanding what similar properties have recently sold for can help you determine what price to list your home for. Consider pricing it at or slightly lower than market value. Pricing it too high can deter buyers and cause it to sit on the market longer than you’d like. 

Tips for a seller’s market

There are also plenty of things you can do whether you’re buying or selling during a seller’s market. 

5 tips for buyers in a seller’s market

1. Move quickly: In a seller’s market, you’ll need to move quickly on a home that you want to make an offer on. Properties can go fast, so if you know you like a home you’ll need to move fast on an offer.

2. Consider an all-cash offer: In a seller’s market, all-cash offers can stand out amongst the competition. If you have the means, an all-cash offer can help you win against other offers.

3. Understand the disadvantages: You’re at a disadvantage in a seller’s market and may not have wiggle room for tough negotiations. Keep contingencies to a minimum and don’t expect seller concessions like repair requests or flexible closing dates. Know what you’re willing to compromise on and what’s a dealbreaker when you’re looking at homes.

4. Don’t settle: It may feel like you need to make an offer on a home that isn’t exactly right for you, just because inventory is low. However, it’s important not to settle on a home. Buying a home is an investment, so it’s best not to make a rash decision that can impact you for years to come.

5. Stay patient: It can feel discouraging if homes are quickly sold or your offers are rejected. Staying patient for the right property – and not offering over your budget – can be the right option in a seller’s market.

6 tips for sellers in a seller’s market

1. Declutter your home: Be sure to clean and declutter your home before any tours. A tidy and maintained home can help buyers envision themselves living in the space.

2. Price your home fairly: Even in a seller’s market, you want to price your home fairly. You don’t want to list it for more than it’s worth, just because you can. If your home is priced at, or slightly below, market value, it can potentially attract more buyers – or even start a bidding war.

3. Ask for a mortgage pre-approval: It can be a good idea for any buyers to have a pre-approval before making an offer on your home. A pre-approval can reassure you that buyers are likely to obtain a loan on the home purchase.

4. Carefully consider offers: While accepting the highest offer may sound best, it’s not always the best offer. Examine each buyer’s financial situation carefully, as some buyers may not be able to afford the offer they submitted. You don’t want to accept an offer that may end up falling through.

5. Review any contingencies: Buyers often submit some contingencies as part of their offer. It’s important to review the contingencies and weigh the pros and cons before accepting the offer. Contingencies allow buyers to back out of the contract if certain conditions aren’t met.

6. Aim for a quick sale: You want to avoid your home sitting on the market for too long. Buyers may think there’s something wrong with the property, like undisclosed issues or incorrect pricing. 

FAQs about buyer’s market vs seller’s market

Should you buy in a seller’s market?

It’s up to your circumstances, but a seller’s market shouldn’t stop you from buying a home. For example, if you have the budget to compete against multiple offers or need to move quickly, it can make sense to buy.

Should you sell in a buyer’s market?

A buyer’s market shouldn’t stop you from selling your home. If you need to sell your home because you’re moving, for other financial reasons, or simply because it’s the right time – you can still sell. 

What causes a buyer’s market?

There are a variety of factors that can cause a buyer’s market. Some include economic recession, nationally or locally, declining job market, increased new construction, and demographic shifts in your area. 

What causes a seller’s market?

Seller’s markets can be caused by low interest rates, growth in the job market, population growth in your area, and decreases in new home construction.

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