How to Tell The Difference Between Buyers and Sellers Market

By
Real Estate Agent with RE/MAX Executive Realty 91362

Whether buying or selling a home, you want to get the best deal possible. Buyers are looking to get more for their money and keep costs low. Sellers want to get as much cash for their homes as they can.

The situation in the housing market affects whether buyers or sellers have an advantage. The number of homes available compared to the number of buyers, creates a market that is either favorable to buyers or sellers.

Supply and demand in the local housing market will reveal the situation; so is it a buyers or seller's market? We will look at the difference between a buyer's market and a seller's market.

By the time you're done reading, you'll be able to tell what type of real estate market currently exists in your location.

What is A Buyers Market?

When there are not many buyers looking to purchase homes, and a lot of inventory, it is a buyers' market. It means there will be more competition between sellers to find a buyer for their property, pushing sales prices down and increasing concessions from the seller.

Home buyers are in the drivers seat in a buyer's market.

How to Deal With a Buyers Market

Your approach to a buyer's market depends on whether you are buying or selling. Let’s look at the best strategies for dealing with a buyer’s market.

As a seller

In a buyers market, you can't expect to get the best price for your home or sell it as quickly as you might want. For these reasons, it is better to hold off selling your home if you can. But if you can't wait for the market conditions to change, there are still strategies you can adopt to make the most of the situation.

Your real estate agent might have some advice on the improvements and changes you can make to sell your home for the best price. Things like having your home professionally staged can help attract a buyer faster.

There will be far more homes for sale in the MLS, so you need to do everything possible to stay ahead of the competition.

As a buyer

This is the best market to try to buy a home. You can relax a little as you are likely to face less competition for homes you like. Comparable sales found in a CMA can guide you on the right offer to make, and there is a greater chance that lower bids will be successful.

Though when the seller is unwilling to budge on price, there could still be other things that will sweeten the deal for you.

Perhaps they will accept more contingencies, do more repairs to the home, or help with closing costs.

What is A Sellers Market?

When there are more buyers than homes for sale, it is a seller’s market. Thanks to competition between buyers, prices will rise. Sellers are likely to have multiple offers on the table, and so are unlikely to lower their price or offer concessions.

The time a home remains on the market will be a lot shorter as well. A seller will be in the drivers seat in this type of market.

How to Deal With a Sellers Market

The increased competition of a seller's market does make it difficult for buyers, but whichever side of the transaction you are on, there are things you can do to make the most of it.

As a seller

Even though the situation is easier for sellers in this type of market, you shouldn't sit back. It is still important to prepare your home, take care of maintenance issues, clean, and declutter.

The last thing you want is any resemblance to a hoarder home. You should strive to make the home as appealing as possible.

While it will be more tempting to price your home at the top end, you can still ask too much.

An overpriced home will remain on the market for longer than comparable properties, and buyers will notice this, likely assuming there is an issue with the home.

There will be a greater chance that you need to reduce the price, something that will also be noticed.

As a buyer

If you can wait to purchase a home, you probably should until the situation turns around. If this isn't an option, you'll need to be prepared to move quickly when you find a home you like.

You need to be prequalified for the loan you need, and be prepared to sign the purchase contract and deal with the different stages before closing.

You also have to be ready to offer more for the home to try to avoid a bidding war and don't expect any concessions. Bidding wars can quickly escalate the price, so it's something you want to avoid.

When you are making an offer, and you will be using a loan, the bank will not lend more money than the home is worth. If there is an appraisal gap, you will need to find the difference or negotiate a reduction with the seller, something that isn't going to be easy.

What is a Balanced Real Estate Market?

A balanced real estate market occurs when supply and demand for housing fall in line with one another. Neither the buyer or the seller has a decisive advantage over the other.

Home prices may go slightly up or down.

Final Thoughts

Recently, most areas have seen seller's markets, but that may not continue. Look at the inventory available and how quickly homes sold to help you understand whether your local market benefits buyers or sellers. Based on this, you can decide if right now is the best time to buy or sell a home.

If you are buying and selling a home simultaneously, the type of market becomes less important. You will likely do well on one or the other properties.

Always consult with a professional to find out the current real estate environment. Use a real estate agent you can trust to guide you with one of the more vital financial decisions in your life.

Posted by

Bill Gassett is a thirty-two year veteran to the real estate industry. He enjoys providing helpful information to buyers, sellers and fellow real estate agents to make sound decisions. His work has been featured on RIS Media, National Association of Realtors, Inman News, Placester, RESAAS, Credit Sesame and others.

Comments (6)

Sham Reddy CRS
H E R Realty, Dayton, OH - Dayton, OH
CRS

Thanks for sharing Bill!!! Great information!!!

The situation in the housing market affects whether buyers or sellers have an advantage. The number of homes available compared to the number of buyers, creates a market that is either favorable to buyers or sellers.

Jul 04, 2022 02:27 PM
Paddy Deighan MBA JD PhD
http://irstaxdebt.pro - Vail, CO
Paddy Deighan J.D. Ph.D

I ascribe to the concept that quality sells in any market. There are always buyers and sellers and quality always commands a fair price

Jul 04, 2022 10:39 PM
Richard Weeks
Dallas, TX
REALTOR®, Broker

Great information, thanks for sharing.  I hope you have a great day.

Jul 05, 2022 02:52 AM
Eileen Burns
Trans State Commercial RE Ft. Lauderdale/Miami/Palm Beach - Fort Lauderdale, FL
FLorida Real Estate Connector

Clear and concise reporting Bill Gassett 😎 Glad to see you raining again

Jul 05, 2022 06:55 AM
Jan Green - Scottsdale, AZ
Value Added Service, 602-620-2699 - Scottsdale, AZ
HomeSmart Elite Group, REALTOR®, EcoBroker, GREEN

Excellent explanation of buyers and sellers markets.  Anyone reading your commentary will have a more clear understanding of the type of market they are experiencing.  Staying on top of which market exists, and sharing that data, is a realtors responsibility on behalf of their clients.  GREAT post!

Jul 05, 2022 10:38 AM
Bill Gassett
RE/MAX Executive Realty - Hopkinton, MA
Metrowest Massachusetts Real Estate

Thanks everyone for all your comments on buyer's vs. seller's markets.

Jul 06, 2022 05:33 AM