Certain real estate factors create circumstances where local market conditions are especially preferable for one side of a property transaction. This is called either a buyers or sellers market, depending on which party is reaping the benefits of the market conditions at a certain time.

Buyers and sellers must understand how the market conditions at the time of their purchase or sale will impact their transaction experience.

Knowing whether it’s a buyers or sellers market lets you coordinate an appropriate strategy in response to the challenges and opportunities of your local market.

Buyers or Sellers Market Explained

The deciding factor determining whether it's a buyers or sellers market is the relationship between supply and demand.

The party that has the most competition is at a disadvantage, while the party with less competition has the upper hand.

Buyer’s Market

In a buyer’s market, buyers have the upper hand.

Typically, a buyer’s market has ample supply and low demand. This gives buyers a wide choice of homes to purchase without having to worry about competing shoppers.

On the other hand, sellers have heavy competition since there are many listings on the market. When it comes time to make an offer and proceed with escrow, sellers don’t have as much negotiation leverage since buyers wield more power.

Seller’s Market

In a seller’s market, sellers have an advantage over buyers.

Seller’s markets usually experience high buyer demand with comparatively little supply of listings.

When many buyers are shopping the market at the same time, buyers have to compete with each other for the inventory of homes. Since there are fewer sellers, there are fewer options for buyers to choose from.

Fewer available homes increase the likelihood of sellers receiving multiple offers. Sellers can vet offers and find the best buyer for them.

5 Strategies for Buying in a Seller’s Market

• Seek pre-approval and pre-qualification from your lender
• Make a strong, competitive offer
• Include earnest money
• Include an escalation clause
• Consider an all-cash offer

5 Strategies for Selling in a Buyer’s Market

• Invest in pre-listing repairs and renovations
• Update appliances with new, eco-friendly models
• Consider waiving certain contingencies at the recommendation of your agent
• Create a seamless online listing
• Leverage home staging

Remember: Real Estate Markets Experience Cycles

The conditions that you observe in a real estate market will not last forever. Real estate markets experience cycles that regularly change in response to new activities taking place.

Both buyers and sellers need to keep the changing pace of their local markets in mind.

If the market is currently favoring your end of the transaction, it’s a good time to take action. Stalling when the market is supporting your interests may result in missed opportunities.

If the market conditions are not favorable for you, stay positive and remember that it won’t last forever.

You will need to decide whether you want to wait it out or move forward with data-specific strategies in mind to combat potential challenges. Speak with a trusted agent about their recommendations for timing your purchase or sale based on market conditions.

Whether it’s a buyers or sellers market, the activity will eventually balance out and evolve. Discuss timing as a strategy with your agent to determine the most opportune moment to enter the market.

Hiring a Top Agent is Always the Best Strategy

In any market, the best strategy for both buyers and sellers is to work with the perfect real estate agent for you.

Hiring a top agent in your market will give you access to their abundance of expertise, experience, knowledge, and industry connections.

The best real estate agents work diligently to build a customized strategy that responds to client needs, preferences, and external market conditions.

If you are a buyer in a seller’s market, or a seller in a buyer’s market, a top agent will be able to recommend the best course of action to help you achieve your real estate goals.

Even when the market supports your interests, partnering with the perfect agent will allow you to maximize the benefits and achieve an even better outcome than expected.

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