Difference Between a House Buyer's Market and a Seller's Market

If you are thinking of selling or buying your house in the upcoming weeks, months, or years, you should have some idea about the housing market. There are some seasons that are suitable for house buying and selling, and there are fluctuations among the seasons. But there are fluctuations in the real estate market as well, and the fluctuations between the markets are related to the demand and supply concept. In this article, we will try to explore the difference between the buyer's and seller's housing markets.

But first, start with some information regarding supply and demand.

The Concept of Supply and Demand‍ for the Real Estate Market

Like other markets, the demand and supply rules also direct the real estate market.

Demand in the real estate market

In the housing market, demand means the number of buyers seeking to buy homes.

Supply in the real estate market

In the housing market, supply means the number of homes available for sale.

The relationship between demand and supply determines the real estate market's overall situation and a home's price. When there is a fluctuation either in the demand or the supply, there will be a fluctuation in the market as well.‍

Buyer's Market & Seller Markets

What Is a Buyer’s Market?

A buyer’s market develops when supply is higher than demand. In other words, there is a higher level of real estate inventory and lots of homes for sale, but interested buyers are less in quantity.

Because in this market, the housing inventory is high in quantity, sellers have to give up their bargaining power. House prices are decreased in the buyer's market, and sellers compete with each other to attract potential buyers.

Tips for buyers who want to buy from the buyer's market

• In the buyer's market, you will have a lot of options to choose from, and buyers may be willing to lessen the asking price. Before you go for negotiations, take some ideas about the list price. It will help you to get an idea about the current price ranges.

• This market is ideal for buyers. Because home prices are lower and the competition among buyers is very low.

• You should go and know the properties available within your budget range before you make an offer. It will help you to find an ideal offer and will also give you the ability to negotiate a price.

• You should pay attention to how long a particular house has been available in the market. It will give you the power to negotiate for a lower home price.

Tips for sellers who want to sell in the buyer's market

• Do some repair work before selling your house so that you can stand out in this market. Make some needed repairs. Since the properties are more than the buyers in this market, buyers will be pickier because they have lots of options.

• Give a deep clean to your entire house and get rid of clutter. Spend a lot of time in your house and try to imagine how others will view your house. If you see there is some boringness in your house, do some landscaping.

• Depersonalize your living space. You must get rid of the family photos, souvenirs, papers or anything that points to you.

• Take stellar and professional photos of your house. Since this market is professional, your property photos must also be professional. If your decor is backdated, hire a professional to transform your rooms into polished ones.

• Make the price of your house competitive. Survey other similar houses, learn what is their asking price and then set your price. Since you don't have enough power to negotiate in this market, buyers may ask you to cover closing costs. In this case, negotiate wisely. You can agree to cover a portion of the closing costs.

Seller's Market

What is a seller’s market?

A seller’s market develops when demand is higher than the supply. In other words, there are many interested buyers, but there are not many homes for sale, and real estate inventory is also low. 

Because in this market, the housing inventory is low in quantity, sellers have the bargaining power. Asking prices are high in the seller's market, and buyers compete with each other to win the race.

Furthermore, since the interested buyers quantity is higher than the number of houses for sale, buyers' power to negotiate is very less, which leads the buyers to accept properties as-is.

Tips for buyers who want to buy from the seller's market

• If you can find your dream house in the seller’s market, you should act as soon as possible. If you hesitate or delay over your dream house but want to buy it, you may lose that offer.

• When you are in a seller’s market, avoid trying to push too many concessions, contingencies, repairs, or specific closing dates. It may make the seller demotivated to sell the house to you. But, If you are making an all-cash offer for that house, you can do those because sellers do not have to go through financing issues.

• Since the seller market has less supply and high demand, you have to keep your patience because you may be caught up in the bidding wars and end up paying more money than a house is worth.

• Buying a house is a huge investment. So, buy a house in which you have an interest. Do not buy a house that is just available in the seller's markets unless you want to move quickly due to the office or kid's school. So, wait if you are not satisfied. If you are fully prepared, seller’s markets are easy to manage.

Tips for sellers who want to sell in the seller's market

• You have to act quickly. Because this market is a hot market and houses don’t stay long in the seller’s market. Sometimes when a real estate agent shows homes before listing, they start the dealing.  So, you have to make decisions fast.

• In the seller’s market, sellers have to compete with each other to attract buyers. So, you have to organize and clean your home so that buyers are attracted in the first place.

• Give your house a fair price. If you fix the asking price at the fair value or slightly below the fair value, you will be able to bring more interested buyers into your bucket. Some house sellers set their house prices slightly below the market value to start a bidding war.

• Make sure that your buyers are pre-approved. It will give you the confidence that your buyer is serious about your home. Pre-approved buyers are generally financially stable.

• Offers that include contingencies like home sale contingencies, inspection contingencies, mortgage contingencies, and appraisal contingencies are risky deals. So, beware of contingencies written on the contract papers. These will enable the buyers to cancel the deal if the conditions aren't fulfilled.