In the world of real estate, it's crucial to understand the difference between a sellers market and a buyers market. Current market trends and the housing market often stipulate or dictate if real estate investment is ideal and at what time.

In a sellers market, there are more buyers than properties available for sale. This can drive up prices and lead to bidding wars. Sellers have the upper hand and can often sell their property quickly and for top dollar.

On the other hand, in a buyers market, there are more properties for sale than there are buyers. This can put downward pressure on prices and give buyers more negotiating power. Properties may sit on the market longer, giving buyers more time to make decisions.

Whether you're buying or selling, knowing whether it's a sellers market or a buyers market can help you navigate the real estate market more effectively. Keep an eye on market trends and consult with a real estate professional to make informed decisions.

Economic Rule of Supply and Demand

In real estate, the market is tied to the basic economic rule of supply and demand, which determines if a market is a buyer’s market vs seller’s market. Sure, certain seasons might have more foot traffic than others, but the housing market could vary drastically from neighborhood to neighborhood. I’ll help you identify “Is it a buyer’s or a seller’s market?” and break down the important concepts for you to explain to your clients. 

Some Important Definitions 

When supply exceeds demand, we see a buyer’s market. This phenomenon means there are fewer buyers than there are homes for sale. In this scenario, buyers have a bit of leverage. Competition is lower for a home, and the number of days on market increases for listings. A buyer’s market can be determined by calculating the months of inventory. Anything more than six months is traditionally considered a buyer’s market. 

• Buyers have leverage: Buyers have more power in a buyer’s market—which means better negotiation terms.
• Strategic home searching: The high inventory allows buyers to be choosy. Your focus should be on analysis to help your buyers focus on what they really want.
• Standout sellers: Sellers (and their agents) must focus on marketing, repairs, and competitive pricing to stand out and snag offers.
• Preparation and presentation: Sellers should focus on depersonalizing and decluttering their homes to appeal to a wide range of buyers.

A buyer’s market means that your buyers have the upper hand in terms of negotiation. At its core, a buyer’s market means that supply is higher than demand. 

With a buyer’s market, new listings are common. You can expect to see: 

• High real estate inventory
• Fewer interested buyers

The Sellers Market 

• Sellers’ advantage: Sellers have the upper hand due to limited supply. You can expect quicker sales and potentially rising prices due to high competition and scarce supply.
• Quick decisions for buyers: Due to the intense competition, buyers must be fully prepared to make a strong offer—sometimes even above asking price.

• Strategic pricing is key: Sellers (and their agents) should price homes to attract buyers—this could spark a bidding war that drives up the price. Pricing can fluctuate rapidly in a seller’s market.

• Sellers still need to prepare: While the market favors sellers, buyers still gravitate to well-prepared listings priced right, marketed effectively, and presented in the best possible light. These homes will stand out and may even sell quicker (and for more money)!
• Help your buyer navigate challenges: Your buyers will have limited leverage in negotiating the deal. They also need to move fast. Help coach your clients on patience as well as being ready to act fast when needed.

When demand exceeds supply, we see a seller’s market. This means there are fewer homes than there are buyers. This has been a common challenge for many agents and homebuyers in the market lately. 

In this scenario, sellers have the upper hand in negotiations. Buyers are hungry for homes, and there aren’t enough to go around. Traditionally, the number of days on market is low. A seller’s market is outlined by calculating the months of inventory

Top Secrets for Buyers in A Buyer's Market

There are a lot of advantages to purchasing a home in a buyer’s market vs a seller’s market. You’ll need to help your buyers be specific about what they want in a home—remember that in this market, you and your buyers have the upper hand in a negotiation! Agents must be diligent about analyzing comps, exploring available properties, and leveraging the number of days on market to help their buyers score a better deal.

Top Secrets for Sellers in a Sellers Market

For those sellers in a buyer’s market, you must be strategic about selling your home. We have some tips: 

• Make your property stand out through marketing and continued outreach
• Make those needed repairs
• Depersonalize and declutter