Buyer’s Market vs. Seller’s Market: The Key Difference

The terms “seller’s market” and “buyer’s market” generally reflect which side of the real estate transaction has the upper hand when it comes to negotiating. While sometimes the entire nation can experience one type of market or the other, it’s more common for market conditions to be tied to a region, a town or even a neighborhood.

Multiple factors can influence housing markets including the local job market, new construction that offers more options for homebuyers, the reputation of various school districts, mortgage rates, home values and national economic conditions.

How do you know if you’re in a seller’s market or a buyer’s market?

While there’s no definitive answer to what type of market you’re in, typically there are indications that demonstrate which side of the transaction sees more favorable conditions. In a seller’s market, home prices are usually going up, homes are selling quickly and there are fewer homes on the market. In a buyer’s market, the opposite is true: home prices are flat or falling, homes sell slowly and there are plenty of homes on the market.

‍What Is A Buyer’s Market?

A buyer's market occurs when the real estate market has more homes for sale than buyers. In this type of market, buyers have more leverage over sellers, leading to potentially lower house prices, more time to make decisions, and oftentimes, the ability to negotiate favorable terms. This situation usually arises when the economy is weak, or there's an oversupply of homes due to various factors like new construction or demographic shifts.

What Is A Seller’s Market?

Conversely, a seller's market is characterized by a shortage of homes for sale and a large number of buyers. This imbalance often leads to higher home prices, quicker sales, and competitive bidding wars. Sellers in this market have the upper hand and can often choose from multiple offers, sometimes even above their asking price. This type of market typically emerges during economic growth, low mortgage rates, or when housing supply can't keep up with demand.

You can ask a real estate agent about your local market or check statistics such as how many homes are available, how many days homes usually stay on the market and whether prices are going up or down. Here are some of the indicators to watch out for:

• Price Trends: Take note of whether the average home price in the area is increasing or decreasing. Rising prices typically indicate a seller’s market, while decreasing prices suggest a buyer’s market.
• Number of Days Homes Stay on the Market: Homes that sell quickly, often in days, point to a seller’s market. Conversely, if homes linger for weeks or months, it’s likely a buyer’s market.
• Market Prices Relative to Asking Prices: In a seller’s market, homes often sell for at or above asking price due to high demand. In a buyer’s market, homes may sell for less than the asking price.

‍Buyer strategies for any market

In a seller’s market, buyers need to be prepared with a preapproved loan, a higher deposit and a strong understanding of the market and their priorities since they may need to make a fast decision. In a highly competitive housing market, buyers may want to consider a cash offer program such as the one Revive offers. Essentially, you get preapproved for a loan and Revive makes a cash offer for the home you want. You can move into your new home before you sell your previous home.

In a buyer’s market, you have more options to consider and can take more time to make a decision. You can compare various homes and have more negotiating power. Just remember that you may not get everything you want, so you’ll need to set priorities for your home and your financing.

Seller strategies for any market

Even in a seller’s market, homeowners need to clean and prepare their home to attract buyers. Pricing the home in line with market conditions is important, since a home that is overpriced may not get any offers and will eventually sell for less than it’s worth.

In a buyer’s market, homeowners need to be more strategic in their pricing, be prepared to negotiate and to offer concessions to buyers such as paying closing costs. No matter what market conditions are like, homeowners may want to consider hiring a concierge service like Revive to renovate their home in order to get a higher price.

Most home sellers are also buyers, so it’s wise to consider both sides of the transaction when you’re ready to move. Revive provides upfront funding so you have your cash available for your purchase. The renovation costs will be repaid when you sell your home, typically for a higher price than if you sold it without fixing it.

Bottom Line

Navigating the complexities of real estate markets requires insight into current trends and conditions. Whether you're buying or selling, understanding whether it's a buyer's or seller's market can greatly impact your strategy. Revive offers tailored expertise and services to help you make informed decisions and capitalize on market conditions, ensuring you benefit from your real estate decisions.

Whether you’re a buyer, a seller or both, Revive has the expertise to help you make the move from one home to another.