The Difference Between a Buyer's Market and a Seller's Market (and How to Take Advantage of Both)

Photo: Elena Berd (Shutterstock)

Knowing when to buy or sell a house is tricky. Sure, particular periods of time are labeled either a “buyer’s market” or a “seller’s market,” but aside from making a broad statement about who has the upper hand, what do these terms actually mean? And what should you do if you’re a buyer in a seller’s market, or vice versa? Here’s what to know.

What is a buyer’s market?

Ultimately, the market type indicates which group has the most negotiating power—so in a buyer’s market, those looking to purchase a home tend to have a better selection to choose from, and get more bang for their real estate buck. This is because there are more homes for sale than there are interested buyers.

According to Forbes, potential causes of a buyer’s market include:

• An economic downturn
• A major employer leaving the area

• High or escalating crime rates
• Overbuilding

What is a seller’s market?

In a seller’s market, there are a lot of people looking to buy houses, but not enough homes for sale to meet that demand. The housing shortage means that homes sell quickly once they’re listed, and may go for higher prices than expected if multiple buyers end up in a bidding war.

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How to take advantage of any type of market

Even if the housing market isn’t currently in your favor as a buyer or a seller, there are ways you can still make the most of it.

For example, if you’re not getting anywhere selling a house in a buyer’s market, you can take the opportunity to make any minor updates or repairs on the home to make it more appealing to buyers. It doesn’t need to be anything costly or drastic—simply removing personal/family photos from the walls, decluttering, or doing some simple landscaping can end up making a difference.

On the other hand, if you’re a buyer in a seller’s market, keep attending open houses and exploring the area. The more of it you have a chance to see, the better of an idea you’ll have of what you actually want—rather than simply buying something solely because it’s available.

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