Buyer’s market versus Seller’s market

Buyer’s market vs. seller’s market: What’s the difference?


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 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.

How to navigate a buyer’s market

Depending on which side of the fence you’re on, consider these tips for crafting a strategy in a buyer’s market.

If you’re a seller

Do you absolutely have to sell your place right now? If not, you might want to delay your listing until the market shifts. However, a buyer’s market doesn’t have to mean holding on to your home. 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. 

If you’re a buyer

Pat yourself on the back — you’ve chosen a good time to buy. Take your time. Since there isn’t as much competition, you don’t need to feel rushed to make an immediate offer. Research comparable properties so you’ll know how to make the right offer. Your agent can help guide you. Even if you can’t get a seller to come down on the price, for example, 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 doesn’t meet the demand from buyers, you’re in a seller’s market. Home prices tend to go up as buyers compete for the few options that are 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 too close and move on.

How to navigate a seller’s market

A seller’s market can feel overwhelming for buyers, and perhaps a bit too tempting for sellers. Follow these tips to make a deal that works for you.

If you’re a seller

You’re still going to want to make your home appealing to buyers, even if the competition isn’t as stiff. Even though it is a hot market that doesn’t mean you should forsake purging, refreshing and normal maintenance. Buyers notice a lack of attention to details and will wonder what else has been neglected. 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 for too much. Don’t get too greedy, because it can backfire on you. Allow your Realtor to prepare a current market value for your house.

If you’re a buyer

You may want to consider holding off until the market is more favorable for you. If you don’t have the option to wait, you’ll need to act fast.

The real estate market today

If you entered the real estate market between 2020 through the first half of 2022, welcome to the definition of a seller’s market. Inventory is low — particularly for affordably priced properties — and many sellers have been enjoying bidding wars, waived home inspection contingencies and all cash offers. During this time, many houses sold above asking price. We are now seeing a slight shift in the market.

How to determine what’s happening, going forward

Will all of 2022 feel like a seller’s market? It’s impossible to predict, but rising interest rates may be able to bring the housing market back down to earth. Looking ahead, 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 inventory of properties with what you’ve seen before. In general, the more homes that are available, the likelier it is that it’s a buyer’s market. On the flip side, fewer options generally tip the scales in favor of sellers.
  • Recent sales: Take a look at some properties in the area that are comparable to the one you’re hoping to buy or sell. If they sold above asking price, it’s likely a seller’s market. If the price ended up below ask, it’s likely a buyer’s market.
  • Days on market and pricing: The longer a home remains on the market, the more the seller may be willing to do to offload it. If a seller has recently decreased the sales price of a property comparable to the one you want, it’s often a sign that it was priced too high originally. The same goes if the price hasn’t budged but the home has been on the market for a while. It’s not uncommon for sellers to ask for more than what the market is willing to pay, so as a buyer, you’ll want to review multiple properties to determine whether it’s a trend or an isolated occurrence.
  • Local market trends: Consider the data and local housing trends. 

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