When you decide to buy or sell a home, you might discover that everyone thinks they are a real estate expert when it comes to determining whether it’s a buyer’s market or a seller’s market.

Your coworker may warn you that it’s a seller’s market while your mom cautions against the buyer’s market. Stuck in the middle, you might not know what kind of market it is and what it means for your real estate prospects. Many people list their homes regardless of the type of market they are in. However, you may get a better deal depending on what type of market it is.

Keep reading to learn the difference between a buyer’s market and a seller’s market and to see when might be the best time for you to sell or buy a home.

What Is a Seller’s Market?

The housing market follows the same laws of supply and demand as any other industry. When there aren’t any houses available, demand goes up — along with house prices.

For example, If there is only one house in a neighborhood for sale and multiple buyers want that house, then the buyer will likely pay full price for it or even get into bidding wars, paying more than the listing price to get the property.

Homes in a seller’s market are also more likely to sell quickly. When a home is listed, the eager buyers will check out the new listing and compete to get it.

The original homeowner benefits because they can sell a home fast, turn a profit on their home, and do minimal work to get noticed.

What Is a Buyer’s Market?

A buyer’s market occurs when the demand for houses shifts, and there are more houses than willing buyers.

For example, if there are five houses for sale in a neighborhood but only one potential buyer, then that buyer can select their top choice or move onto another house if the homeowner isn’t willing to meet their terms.

Sellers in a buyer’s market may have to be more flexible if they want to sell their home quickly. They may have to list the house for a lower price than others or invest in curb appeal, repairs, or renovations to increase the home’s value. The homeowner also needs to do more marketing to get noticed.

Buyers in a buyer’s market can be more competitive with real estate negotiations. They can offer lower bids and walk away if the deal isn’t promising.

Determining Whether It’s a Buyer’s Market or Seller’s Market

There are many factors that determine whether an area is in a buyer’s market or seller’s market. These factors happen on a macro-scale with the national economy, but also on a micro-scale within the neighborhood itself.

Here are a few factors that contribute to the market type and how they can sway demand.

  • Climate and Seasons: More homes are usually listed in the summer, creating more demand for buyers.
  • Local Job Markets: If a major company moves to the area, you may notice the demand for homes increases as people move to fill vacancies.
  • Neighborhood Popularity: Some neighborhoods become popular almost overnight, increasing demand for the homes and driving up home values.
  • Economic Changes: When the national economy is uncertain, home values and demand can change.
  • Local Development: If dozens of homes are built around you then the market may favor buyers who can choose which ones to fill.

The easiest way to determine whether you are in a buyer’s market or seller’s market is to look at the inventory.

If there are more houses on the market now than in the past few months, you are in a buyer’s market. You can also tell that you are in a buyer’s market when houses stay on the market longer, experience significant price cuts, and sell for much less than they list for.

If you are trying to sell in a buyer’s market (or vice versa) then you may want to wait for the tide to turn.

However, there is one challenge with waiting for the markets to change: you don’t know how long they will last. A market can last a few months or several years, depending on the variety of factors listed above. If you decide to wait longer and play the market, you could end up in a worse situation because of it.

Ask Your Realtor® for Help

You don’t need to be a real estate expert to know the best time to enter the market – that’s what your Realtor® is for.

If you are thinking about selling your house or buying a new one, consult a local real estate agent and see what they have to say. Depending on your goals, they may conduct a market analysis and advise in favor of or against participating in a buyer’s market or seller’s market.

At Effective Agents, we want to help you get the best real estate deal possible. Our system helps you find local Realtors® who have expertise in the area where you want to buy or sell. Start your search today and find someone who can guide you to the best options during a buyer’s market or a seller’s market.

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