Buyer’s Market vs Seller’s Market: How to Negotiate and Close the Deal

Determining the right time to buy or sell a home – and the right way to negotiate – can be complex. Home prices can be influenced by mortgage rates, the number of available homes for sale, and the speed with which homes receive offers and go under contract. 

Buyers and sellers have equal negotiation power in a balanced real estate market. However, it’s common for a market to favor either the buyer or the seller when it comes to home prices and the ability to negotiate favorable terms. We’ll help you determine if you’re in a buyer’s or seller’s market and provide strategies to help you close the deal in each scenario. 

Compared: Buyer’s Market vs. Seller’s Market

Key Factors	Buyer’s Market	Seller’s Market
Inventory	There are more homes available, giving buyers more options.	Fewer homes are available on the market, creating competition among buyers.
Days on Market	Homes take longer to sell as buyers have more options.	Homes sell more quickly, sometimes within days, due to high demand.
Competition	Limited competition among buyers with fewer bidding wars.	Higher competition among buyers, potentially leading to bidding wars and above-asking offers.
Negotiation Power	Buyers can negotiate better deals, request contingencies or ask for concessions.	Sellers can demand higher prices and offer fewer contingencies and concessions.
Price	Sellers are more likely to cut prices due to lower demand to attract potential buyers.	Home prices often rise as there’s higher demand and limited inventory.

Is the U.S. Currently in a Buyer’s or Seller’s Market?

The U.S. is currently in a seller’s market due to low housing inventory and high buyer competition. According to the National Association of Realtors (NAR), the inventory of unsold existing homes is 4.2 months’ supply at the current monthly sales pace. A more balanced housing market typically has a six-month supply.

What Is a Buyer’s Market?

In a buyer’s market, buyers have the upper hand. The market trend is such that housing supply exceeds buyer demand, and buyers are more likely to see price reductions and often have more negotiating power. Homes sit on the market longer, and sellers must compete with each other to attract potential buyers. This could mean cutting prices to gain an advantage, and they are also more willing to negotiate to close the deal.

Here are signs that it’s a buyer’s market:

• Inventory levels: In a buyer’s market, there is a larger selection of homes for sale. “When the total number of listed or available homes in a market exceeds six months on hand, it indicates relatively high inventory, thus a buyer’s market,” says Susie Proffitt, a real estate advisor with Engel & Völkers Atlanta. “The more ‘months on hand’ inventory, the stronger the buyer’s power becomes.”
• Price trends: Declining or stagnant home prices indicate a buyer’s market. Sellers are more willing to reduce the asking price to attract buyers.
• Days on the market: This refers to the number of days a home has been for sale, from the listing date to the signed contract. If homes start to spend more days on the market, it suggests a buyer’s advantage.
• Buyer leverage: Buyers have more negotiating power in a buyer’s market. “Buyers can also be a little more demanding when it comes to the terms of the sale,” says Desiree Avila, a real estate agent in Fort Lauderdale, Florida. “For example, buyers can usually offer less than asking, ask for concessions after the inspection or for money toward closing costs.”
• Seller concessions: Seller concessions, including repairs, closing cost assistance, home warranties and more, may be used to attract buyers by reducing their overall cost.

Purchase Considerations in a Buyer’s Market

Time is your biggest advantage in a buyer’s market, where you do not need to act as quickly to submit an offer. “Take your sweet time, deliberate over your options, and when the time is right, strike with an offer that, naturally, has contingency protections, particularly around the all-important inspection timeframe,” says Alexei Morgado, a licensed real estate agent in Florida and founder of Lexawise, a real estate exam prep company.

Selling Strategies in a Buyer’s Market

• Price strategically: Price your home strategically to avoid letting it sit on the market for too long. Avila recommends hiring an experienced and knowledgeable agent who understands your local market conditions. 
• Be willing to negotiate: Buyers will want to negotiate, so be flexible. “Being willing to negotiate just covering the closing costs helps in attracting way more interest,” Morgado says.
• Make your home stand out: When buyers have more options, do what you can to give your home a competitive edge. An experienced agent will advise you on how to prepare your home and highlight the property’s best features.

What Is a Seller’s Market?

A seller’s market favors the individuals who are selling their homes. In this type of market, demand exceeds supply, and sellers are more likely to receive multiple offers, sometimes above the listing price.

Here are the primary indicators of a seller’s market:

• Low inventory levels: The inventory levels in a seller’s market are typically below what’s considered a balanced market. According to Proffitt, “When the total number of listed or available homes in a market drops below an average of six months on hand, the lower inventory indicates a seller’s market.”
• Rising prices: Rising home prices also indicate a seller’s market. “In this situation, sellers can expect to sell at higher prices and can often experience multiple offers due to buyer competition,” Proffitt says.
• Bidding wars: Multiple offers and bidding wars often occur in a market that favors sellers. With more buyers and fewer homes on the market, buyers compete against each other through a series of price bids, which can sometimes increase the final price past the property’s assessed value.
• Faster sales: In a seller’s market, homes sell faster because demand exceeds supply, and prospective buyers fear losing out on a property. Listed homes can potentially go under contract within a week or even less.
• Limited negotiation: Sellers have more leverage and may not be open to negotiation. They can be picky about each bid and often pick the one with the fewest contingencies, which are terms that must be met before closing.

Purchase Considerations in a Seller’s Market

Buyers don’t have the luxury of taking their time in a seller’s market. You must act more quickly and potentially prepare for a multiple-offer situation. “Be prepared to move fast, as properties disappear in minutes, and being able to be in constant contact with your agent and ready to react makes all the difference,” Morgado advises.

You must also know that the seller has more leverage during negotiations. Morgado suggests strategies such as reducing or waiving certain contingencies in your offer.

Securing a mortgage preapproval is also essential in these market conditions since you want to show the seller that you’re a serious buyer. “Have a pre-approval from your mortgage company ready, be prepared to shorten due diligence periods and strengthen your offer with considerable earnest money,” Proffitt recommends.

Listing Strategies in a Seller’s Market

• Prepare your home: Even in a seller’s market, it’s important to clean, prepare and stage the home for sale. “Sellers in a seller’s market should also give attention to preparing their home for the ultimate sale price and terms,” Proffitt explains. “Even in a low inventory market, homes that need a lot of updating or work can languish.”
• Set a competitive price: When sellers have the upper hand, they can set competitive prices and potentially receive multiple offers. 
• Consider each offer: Go over each offer you receive to determine what makes the most sense for you rather than going with the highest bid. “It also pays to consider each offer strategically for better conditions, more solidly financed buyers or fewer contingencies,” Morgado explains.

Buyer’s Market vs. Seller’s Market: The Bottom Line

Understanding whether it’s a buyer’s market or a seller’s market will help you navigate the homebuying or selling process more effectively.

A buyer’s market allows buyers to negotiate favorable terms, while sellers should focus on pricing strategically and making their homes stand out. On the other hand, a seller’s market allows homeowners to maximize their return, while buyers must act quickly and come prepared with competitive offers.

No matter the type of market, it’s important to research your market conditions and consult a local real estate agent for personalized advice.