Couple looking at homes in a buyers market.

Buyer’s Market Vs. Seller’s Market: What’s The Difference?

Miranda Crace8-Minute Read
UPDATED: May 22, 2023

If you’ve been thinking about buying or selling a home, now might be the right time to try.

Before making the leap, consider the current housing market climate. Whether it’s a buyer’s market or seller’s market can make a big difference in the home buying or selling process. Here’s a closer look at both market types and what they mean for buyers and sellers.

Buyer’s Vs. Seller’s Market: How They’re Different

When you consider what kind of housing market you’re entering as you prepare to buy a house, think in terms of supply and demand those inescapable market forces. When demand for homes is high, prices rise. Sellers have more power in those markets, can ask for increasingly higher prices and are less likely to negotiate terms with buyers.

Ordinarily, increased demand brings more sellers into the marketplace, which in turn causes supply to rise and prices to moderate. That hasn’t happened yet in the current overheated housing market, for reasons we’ll discuss later.

First, let’s look into exactly what these terms mean and how they affect home buyers and sellers.

Buyer’s Market

A buyer’s market happens when the number of available homes is greater than the number of potential buyers. Simply put, supply exceeds demand in the real estate market. “Buyer’s market” is often used in real estate circles, but it can apply to almost any market where there’s more inventory than customers.

One indicator of a buyer’s market is lower home prices. During a buyer’s market, homes often sell right around the listing price or for less. There’s little opportunity to demand anything higher without causing buyers to turn to other sellers offering comparable homes in your area.

Sellers are at a disadvantage because of the volume of competition. Instead of waiting for the right buyer to come along, sellers often agree to a sale for less than what the home was originally listed for.

Another sign of a buyer’s market is seeing homes on the market for longer than average. If you drive through your neighborhood and notice “For Sale” signs aren’t being replaced with “Sold” signs after a few weeks, it’s likely a buyer’s market. It’s unlikely to see a bidding war for a home in this market. It’s also unlikely a buyer would be willing to spend above the asking price with so many homes to choose from.

Seller’s Market

A seller’s market is the opposite of a buyer’s market. In a seller’s market, the number of buyers is greater than the number of homes available. The demand for homes exceeds the inventory or supply.

In a seller’s market, homes sell quicker than normal and often for more than the asking price. With fewer houses on the market, you could receive multiple offers for your home, leading to a bidding war between potential buyers.

If it’s a seller’s market, there are more buyers than there are homes on the market, making it a good time to sell your home. Sellers may have an easier time selling their homes quickly and at a higher price.

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What A Buyer’s Market Means For Buyers

A buyer’s market is the ideal time to buy a home because buyers have the advantage. Not only are there more homes to choose from, but you have the power in most negotiations. Knowing there’s comparable homes on the market gives you the ability to walk away from a sale. And sellers are more likely to make concessions, drop prices and accept less favorable offers.

Tips For Buying In A Buyer’s Market

If you’re in a buyer’s market, it could be a good time to start the home buying process. Here are some tips to help make the home buying process as easy as possible:

Don’t Be Afraid To Negotiate

If you’re a buyer, your goal – besides figuring out what to look for when you're buying a house – is to get the most value from your purchase. This is the time to negotiate the house price with the seller. Here are some of the things you can negotiate during a home sale:

  • The house price
  • Closing costs
  • The inclusion of a home warranty
  • Repairs based on the home inspection
  • Closing date
  • Home possession date

Know The Seller’s Motivations

If you’ve bought a home before, you’re probably familiar with the various negotiation points. Another detail that can help during negotiations is understanding the seller’s motivation for putting a house up for sale. Knowing whether they’re under any financial or time constraints can speed up the buying process and lead to a better deal.

Don’t Rush

You may be tempted to rush through the process of buying a home during a buyer's market, but you don’t have to. Instead, take your time. In a buyer’s market, homes likely won’t be selling as quickly as they sometimes do. So there’s less of a risk that you’ll miss out on a house you really want.

View As Many Homes As Possible

Since you have time in a buyer’s market, it’s a good idea to see as many homes for sale as you can. This gives you more opportunities to find your dream home. It can also help give you the market knowledge you need to confidently make a decision about what and when you want to buy.

Note The Days On The Market

Another factor to consider as you look for homes in a buyer’s market is the number of days each property has been for sale. Generally, the longer a home has been on the market, the more negotiation power you’ll have as a buyer.

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What A Buyer’s Market Means For Sellers

Unfortunately, sellers don’t have much power in a buyer’s market. You may end up having to make tough decisions, like whether to accept less money or leave your house on the market longer. The longer your home is on the market, the harder it’ll be to keep your listing price untouched.

Tips For Selling In A Buyer’s Market

As a seller, your job is more challenging during a buyer’s market. There’s more competition, so you may need to get creative to make your home stand out. Here are a few moves you can make to get your home noticed:

Make Upgrades

Making improvements and upgrades to your home can separate it from others on the market. Whether it’s a small, cosmetic fix or a larger issue, do your best to address anything buyers might bring up during the negotiation process. Some sellers opt for a home inspection before listing to tackle these matters ahead of time.

Deep Clean

Buyers may not notice all your cleaning efforts when they stroll through your house, but they will notice when something isn’t clean. Thoroughly clean and declutter every room in your house to ensure it looks its best during showings. Don’t ignore your yard, either. Some basic landscaping will add more curb appeal to your home.

Set The Right Price

Choose a price that’s fair and comparable to other recent sales in your area. Few decisions are worse than overpricing in a buyer’s market. Pricing your home competitively will attract more buyers.

Improve Your Online Marketing

Most home searches start online. Improving your online listing will attract more buyers, too. If possible, have professional photos taken of your home. Or consider having your home staged virtually to highlight its potential to prospective buyers. What people see online often determines whether they schedule a showing or not.

Offer Incentives

Selling during a buyer’s market might require you to sweeten the deal to attract the right buyer. We already discussed making upgrades. Another option is to pay mortgage points, also known as discount points. Mortgage points are fees paid to a lender at closing to secure a lower interest rate. This is known as buying down the rate and can lower a buyer’s monthly mortgage payments.

What A Seller’s Market Means For Buyers

Buyers will face more competition because there are fewer homes to choose from. With stiff competition, you need to be on top of your game as a buyer. That means pulling the trigger on an offer as quickly as possible when you find the home you want.

Your offer will likely be for the asking price or higher, especially if you want a realistic shot at a deal. If other buyers are interested in the same home, you could end up in a bidding war, driving up the home price even further.

Tips For Buying In A Seller’s Market

While it can be beneficial to wait for a buyer’s market to purchase a home, that’s not always possible. If you need to buy in a less-than-favorable market, here are some tips to keep in mind:

Start Your Mortgage Approval Early

Help yourself by getting preapproved for a mortgage before you start your home search. Preapproval lets you know where you stand and gives you some credibility with the seller.

Work With A REALTOR® Or Real Estate Agent

As a buyer, finding the right real estate professional is key. A good real estate professional can help you navigate buying a home in a seller’s market and will work quickly on your behalf when you find a home.

Be Prepared To Move Quickly

In a seller’s market, you’ll need to act fast once you find a home to make an offer on. If you take too long to act, you may find that the home you were interested in is under contract before you were able to put in an offer.

Maintain Your Standards

Some buyers in a seller’s market find themselves making offers on homes they don’t really want, just so they can get a property without losing out. It might be better to avoid this strategy. After all, a home is a huge investment and commitment. You want to be sure you’ll be happy with your choices after you close.

Stay Persistent

It can take multiple rounds of viewing homes and making offers before one is accepted in a seller’s market. While it can be frustrating to continuously be outbid, stay persistent. The right home will come along eventually.

If you don’t find a home you like or within the price range, your best bet might be to wait until the market adjusts in your favor – if your situation allows.

What A Seller’s Market Means For Sellers

Home sellers are in the driver’s seat during a seller’s market. But that doesn’t mean you should become complacent with your home sale. You’ll want to provide value to attract the right type of buyers.

Tips For Selling In A Seller’s Market

While it can be easier to sell your home in a seller’s market, there are still some key pieces of advice to keep in mind throughout the process.

Take Your Time

One major advantage of selling during a seller’s market is that you can be more patient during the process. You likely won’t feel pressured to accept lowball offers and can take your time finding the right offer and buyer. Buyers have less leverage to make extra requests or demands. You can stand your ground and play the percentages, knowing you’re probably going to receive several offers on your home.

Be Fair

Even in a seller’s market, you’ll want to ensure your home is listed for a fair price. Listing your home at or just below fair market value can help encourage bidding wars that maximize your profit.

Know Your Home’s Value

Knowing your home’s value is an important part of ensuring it sells for the right price. Lenders won't approve a mortgage for a home that appraises far below the sales price. Knowing your home’s value can help ensure you won’t accept any offers that will fall through later due to financing.

Is It A Buyer’s Or Seller’s Market In 2023?

The COVID-19 pandemic housing market has created an ongoing seller’s market, with a huge demand for homes fueled by government stimulus checks, historically low interest rates and the freedom to work remotely. Unfortunately for buyers, uncertainty caused by the pandemic also made many sellers sit tight, limiting the supply of houses available for sale.

Pundits may debate whether there are signs of a softening market, but so far, it hasn’t translated to lower prices for homes. The latest FHFA House Price Index showed housing prices up 2.1% in February 2022 and up 19.4% from February 2021 to February 2022.

When Will It Be A Buyer's Market?

That’s hard to predict. When COVID-19 first arrived, the consensus view was that the bottom would fall out of the housing market. Instead, historically low interest rates fueled massive demand for existing homes, while supply chain issues made building new homes difficult and expensive.

Now, geopolitical concerns, ongoing pandemic disruptions and extreme weather events are fueling inflation, causing the Fed to raise interest rates. As of September 2022, there have been a total of four interest rate hikes this year, including two “jumbo” rate hikes implemented in June and July, bringing the current federal funds rate to 2.25% – 2.5%. How high they’ll need to go before interest rates start to cool demand is unclear.

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What Are The Best Markets For Buyers In The US Right Now?

Here at Rocket HomesSM, we keep a close eye on all of our nation’s housing markets. To find a list of markets favoring buyers or sellers, check out our real estate trends section. You can also see where your target neighborhood stands on the buyer-seller market continuum.

What Other Factors Affect The Housing Market?

You could study neighborhood trend reports to determine the current climate. If you’re planning to buy or sell a home soon, take time to do your homework and talk to your listing agent or buyer’s agent. They’re well-versed in market trends and can answer questions you may have during the buying or selling process.

Generally, several factors can affect which way the housing market shifts.

Seasonality

Time of year affects the market as much as any factor. The majority of people tend to list their home during the spring and summer months. There are several reasons for this trend. Typically, the weather is more favorable. Kids are either wrapping up the school year or already on summer break. There’s more daylight for later showings. It’s also easier to make your house look nicer during the spring and summer months, using landscaping and other upgrades to add more curb appeal.

Location

Housing market trends can vary based on where you live or plan to live. Check with a local real estate agent to determine whether they’re seeing more buyers or sellers right now.

The Economy

Is the economy in a recession, or is it strong and adding jobs at a good rate? Where are interest rates? Are housing prices up or down overall?

If you’re not interested in keeping up with financial markets, a drive around your town can often reveal the state of the housing market. How many homes have “For Sale” signs? If there are several, and some say “Price Dropped,” you’re in a buyer’s market. If signs are few and far between, and have “SOLD” slapped across them, you’re probably in a seller’s market.

Neighborhood Amenities

Other trends that affect a local housing market are amenities near the location, school district changes, housing prices and more. The housing market can vary from state to state, city to city and even different neighborhoods in the same city.

The Bottom Line: Understand The Market To Plan Your Strategy

It’s great when life’s moments coincide with the best market conditions. But the truth is you need a home to suit your family’s needs when you need it, which doesn’t allow you to sit back and time the market. Reassure yourself that you’ll likely make it up on the other side when you sell.

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Miranda Crace

Miranda Crace is a Senior Section Editor for the Rocket Companies, bringing a wealth of knowledge about mortgages, personal finance, real estate, and personal loans for over 10 years.