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Buyer's Market vs. Seller's Market: What It Means and How It Should Influence Your Strategy

Jan 10, 2020 by Aly J. Yale

Are you in a buyer's market or a seller's market? If you're thinking of purchasing or selling real estate, you'll need to figure it out fast. The type of market you're in should greatly influence your strategy as you head into your transaction. It can also help you decide whether this is the right time to buy or sell a property at all.

Buyer's markets vs. seller's markets

Here's the gist of it: Buyer's markets favor the buyers, meaning they have the upper hand and enjoy more negotiating power. In seller's markets, sellers have the competitive edge. In some cases, real estate markets may be balanced, meaning there's an equal amount of supply and demand and neither buyer nor seller has the advantage.

It sounds simple enough, but the conditions are drastically different in each type of market. In one, a buyer could make a lowball offer, see no competition, and enjoy a fairly quick and easy purchase, while in the other, that same person might see countless bidding wars and sellers playing hardball.

Knowing what type of market you're in will better position you to know what to offer, how to go about your negotiations, or even whether you should be buying or selling in the first place.

buyers or sellers market

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How to recognize what market you're in

So, what type of market are you currently in? That depends on a number of things, including how many homes are for sale in your area, the number of people looking to buy, home prices, and more.

Here's what the general conditions look like under each market.

In buyer's markets:

  • There are lots of listings and homes for sale
  • Few people are looking to buy a house
  • Sellers are more willing to negotiate
  • Home prices have dropped or are dropping

In seller's markets:

  • Inventory is low and listings are scarce
  • There's lots of buyer demand and competition
  • List prices are rising
  • Bidding wars and multiple-offer scenarios are increasing

Buyer's markets: What they mean for buyers and sellers

If you're in a buyer's market, supply outweighs demand. There are more listings available than there are buyers, and sellers need to work harder to market and offload their homes.

As a buyer, that's a good thing. You'll probably have your pick of listings, and you might be able to negotiate more as well. You won't come up against many bidding wars, either, so you could see a faster, smoother transaction on the whole.

As a seller, conditions aren't great. Selling in a buyer's market will probably take a little longer, and you might not get the price you're hoping for in the end. You'll need to be willing to negotiate, get creative with your marketing, and maybe even throw in some concessions (like the cost of repairs or new appliances) to motivate the few potential buyers who are out there.

Seller's markets: What they mean for buyers and sellers

If you're in a seller's market, then demand outranks supply. There are more buyers on the market than there are listings, and buyers see tough competition for the few homes that are available.

As a buyer, this isn't the ideal market. You will probably come up against other offers and may find yourself in a bidding war (or several). You also may need to up your offer, waive contingencies, or make other moves to ensure your bids are attractive to sellers. Overall, it may take you longer to find a home that fits within your price range.

As a seller, this is the prime time to sell a home. You might be able to increase your listing price a bit. And as long as your home is in good condition, you can pretty much have your pick of buyers. You can also expect your property to sell fast, and you may be able to avoid some hassles in the process. Waived inspections and all-cash offers are more common in seller's markets.

The bottom line

Whether you're buying a home, selling one, or just thinking about a future investment, it's important to know what type of market you're in before making any moves. If you're not sure what your market conditions look like, speak to a local real estate agent for insights. They may also be able to help you strategize as you get further into the transaction.

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