Seller's Market vs. Buyer's Market

Tuesday Feb 23rd, 2021


The housing market, like most markets, is cyclical. These cycles can be greatly influenced by a number of factors, including interest rates, economic conditions, and consumer confidence, which can create a shortage or surplus in housing. A seller’s market happens when there is a shortage in housing or more potential buyers than homes. A buyer’s market, on the other hand, occurs when there is a surplus in housing or more homes for sale than buyers. A balanced market happens when there is the same number of homes for sale as there are buyers.

Seller’s market at-a-glance

  • More buyers than homes for sale
  • Prices tend to be higher because of increased demand.
  • Homes sell quickly.
  • More likely to be multiple offers on a home, which gives sellers negotiating power (and conditional offers may be rejected)

Buyer’s market at-a-glance

  • More homes on the market than buyers
  • Prices tend to be lower because of increased supply.
  • Homes are more likely to sit unsold.
  • Housing surplus can slow rising prices and even lead to price reductions.
  • Buyers have more choices and more leverage to negotiate.

If you are looking to buy (or sell) a home, it is important to know which type of market you are entering. If you are unsure, ask your real estate agent. Of course, selling a home in a seller’s market is optimal, as is buying a property in a buyer’s market. But people do not necessarily have the luxury of timing their home sale or purchase to coincide with the most advantageous market. It could be quite likely, for instance, that you would be buying in a seller’s market or selling in a buyer’s market.

Tips on selling your home in different housing markets.

Selling in a seller’s market is generally quick and easy. In a buyer’s market, with an abundance of properties sitting idle, you may want to do some legwork to help sell your home. There are a number of things you can do to improve your chances for making a sale. These include:

  • Understand the local market and your competition.
  • Price your home right (and conservatively)
  • Make sure your home is ready to be always shown (consider using a professional home stager who can help show off the best features of every room in your house)
  • Be accommodating to your real estate agent's/prospective buyer’s schedules (think of every showing as the one that could get you the sale)
  • Be flexible with your terms (offer an extended closing date or lower your asking price)
  • Be patient (and stay positive)
  • If you get an offer early on, give it serious consideration because a better offer may not come along.

Multiple offers

In a seller’s market, with fewer homes available to purchase and more buyers looking, you are more likely to get several offers on your home. Here are some things you can do to help increase your likelihood for getting multiple offers:

  • Keep your home clean, clutter-free, presentable, and ready to show (hire a professional stager if you can – see above)
  • Consider pricing your home slightly below its fair market value.
  • Work with your real estate agent to ensure that your home has sufficient market exposure (i.e., list on, create print materials, such as flyers or postcards with key selling points and a professional quality photo of your home, post on social media, consider newspaper/magazine ads, list on other real estate listing web sites and your agency’s company web site)
  • Be ready to show your house on demand (with no appointment necessary)

Tips on buying a home in different housing markets.

With more homes for sale than buyers and potentially lower prices, a buyer’s market could be a great time to buy a new home. Before doing so, however, consider the possibility that home prices could continue to fall, meaning your new purchase might be worth less than you paid for it in no time. Of course, what goes down may eventually come back up. Still, if you wait for prices to drop even further, you might miss out on a great opportunity.

If you are looking to buy in a difficult seller’s market, there are things you can do to improve your likelihood for success.

  • Get pre-approved for a mortgage first, so you know how much home you can afford.
  • Put forward a strong offer with a significant deposit amount.
  • Move quickly on a home if you like it (and be aggressive without being annoying)
  • Make your offer as attractive and uncomplicated as possible (i.e., eliminate as many contingencies as possible, such as a contingency on sale of your existing property, shorten the closing date or come up with a larger down payment)
  • Be agreeable and responsive.
  • Be flexible with your move-in date.
  • Appeal to the seller with a personal letter

Bidding wars

If you should find yourself in a bidding war with another potential buyer, try to not show your hand to them or the seller. Instead, try to figure out the seller’s trigger—such as a specific closing date that would work for them—and include that in your offer. This could potentially give you an advantage over other offers. Also, keep in mind that sellers prefer offers that have no conditions attached.

Contact your mortgage specialist or real estate agent for more tips to help you sell your current home or buy a new one in any type of housing market.

The strategies, advice and technical content in this publication are provided for the general guidance only and benefit of our clients. This publication is not intended to provide specific mortgage, financial, investment, tax, legal, accounting, or other advice for you, and should not be relied upon in that regard. Readers should consult their own professional advisor when planning to implement a strategy to ensure that individual circumstances have been considered properly and it is based on the latest available information.

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