In real estate, the market is tied to the basic economic rule of supply and demand, which determines if a market is a buyer’s market vs seller’s market. Sure, certain seasons might have more foot traffic than others, but the housing market could vary drastically from neighborhood to neighborhood. I’ll help you identify “Is it a buyer’s or a seller’s market?” and break down the important concepts for you to explain to your clients. 

Buyer’s Market vs Seller’s Market: Definitions

What Is a Buyer’s Market?

Key Takeaways:

  • Buyers have leverage: Buyers have more power in a buyer’s market—which means better negotiation terms.
  • Strategic home searching: The high inventory allows buyers to be choosy. Your focus should be on analysis to help your buyers focus on what they really want.
  • Standout sellers: Sellers (and their agents) must focus on marketing, repairs, and competitive pricing to stand out and snag offers.
  • Preparation and presentation: Sellers should focus on depersonalizing and decluttering their homes to appeal to a wide range of buyers.

When supply exceeds demand, we see a buyer’s market. This phenomenon means there are fewer buyers than there are homes for sale. In this scenario, buyers have a bit of leverage. Competition is lower for a home, and the number of days on market increases for listings. A buyer’s market can be determined by calculating the months of inventory. Anything more than six months is traditionally considered a buyer’s market. 

What Does a Buyer’s Market Look Like?

Woman jumping into a man's arms, celebrating while their real estate agent looks on.

A buyer’s market means that your buyers have the upper hand in terms of negotiation. At its core, a buyer’s market means that supply is higher than demand. 

With a buyer’s market, new listings are common. You can expect to see: 

  • High real estate inventory
  • Fewer interested buyers
  • Sellers ready to negotiate

📌   Pro Tip

Need to snag more buyer leads? You can utilize zBuyer to fill your pipeline with leads on-demand. Check out zBuyer at the link.

What Is a Seller’s Market?

Key Takeaways:

  • Sellers’ advantage: Sellers have the upper hand due to limited supply. You can expect quicker sales and potentially rising prices due to high competition and scarce supply.
  • Quick decisions for buyers: Due to the intense competition, buyers must be fully prepared to make a strong offer—sometimes even above asking price.
  • Strategic pricing is key: Sellers (and their agents) should price homes to attract buyers—this could spark a bidding war that drives up the price. Pricing can fluctuate rapidly in a seller’s market.
  • Sellers still need to prepare: While the market favors sellers, buyers still gravitate to well-prepared listings priced right, marketed effectively, and presented in the best possible light. These homes will stand out and may even sell quicker (and for more money)!
  • Help your buyer navigate challenges: Your buyers will have limited leverage in negotiating the deal. They also need to move fast. Help coach your clients on patience as well as being ready to act fast when needed.

When demand exceeds supply, we see a seller’s market. This means there are fewer homes than there are buyers. This has been a common challenge for many agents and homebuyers in the market lately. 

In this scenario, sellers have the upper hand in negotiations. Buyers are hungry for homes, and there aren’t enough to go around. Traditionally, the number of days on market is low. A seller’s market is outlined by calculating the months of inventory. Anything less than six months is traditionally considered a seller’s market. 

What Does a Seller’s Market Look Like?

Twilight photo of a luxury home listing, beautiful green landscaping.

A seller’s market will have few homes for sale and plenty of buyers scrambling to make an offer. This keeps home prices high and leaves buyers little room for negotiation. 

You can also expect to see:

  • Homes selling in under 30 days
  • Cash offers increase
  • Housing prices increase
  • Limited home renovations
  • Little wiggle room for buyers
  • Stiff competition for homes

Buyer’s Market vs Seller’s Market Conditions: What Kind of Market Is This? 

Defining what the market looks like is one of those key real estate terms you need to know. To help you determine the current state of the real estate market, whether it’s a buyer’s market vs seller’s market, you’ll want to look at six key data points. Those include:

  • Real estate inventory
  • Recent sales
  • Pricing trends
  • Days on market
  • Market trends
  • Specific local neighborhood trends

We can calculate the current housing supply by calculating the months of inventory. This is the number of months it would take for the current supply of homes on the market to sell (assuming homes keep selling at the current pace). Historically, six months of inventory has been associated with a balanced market.

How can I calculate months of inventory in real estate? To calculate the real estate months of inventory, simply divide the number of active listings by the number of homes sold. In our scenario above, this would be 7,730 divided by 3,740 to get 2.06. This means we have roughly two months of inventory. Anything less than six is traditionally considered a seller’s market.

For those of us who have been practicing real estate since 2011, it’s arguable whether or not you’ve seen a true buyer’s market. You might want to ask your managing broker if they remember (perhaps back when they were an agent) what the market was like 15 years ago. Times have changed!

In fact, the most recent data from the National Association of Realtors (NAR) Housing Shortage Tracker has highlighted that most metropolitan areas in the United States need to build many more houses for housing supply to keep up with a massive demand for housing.

US Map of housing shortages in different states and cities.
(Source: NAR’s Housing Affordability Initiative, Housing Shortage Tracker)

According to the U.S. Census Bureau and NAR calculations, most metro areas are far short of the housing permits required to keep pace with the number of jobs generated in the areas. NAR started tracking this data in 1999. Historically, one housing permit is issued for every two new jobs in the area. 

Home prices have increased by 44% in the last six years, while housing inventory has decreased by 13% nationwide. Many areas nationwide feel these effects even more dramatically, with current housing supply at record lows. The dark red areas notated on the map below have a severe housing shortage. Want more real estate statistics? We’ve got you covered.

Impacts & Advice for Agents on Real Estate in Each Market

Impacts on Real Estate in a Buyer’s Market

Your buyers might have a long list of properties they’re interested in. In fact, you might have to help them limit their search to find the right home. I know it’s hard to imagine, but consider putting in your buyer’s specific criteria (three bedrooms, a detached garage, and pool) and the MLS returning over a dozen listings in a neighborhood. Now it’s time to get even more limited—this is where your expertise comes in as a buyer’s agent.

Regarding the real estate landscape in a buying market, you can expect a decrease in home prices as listings grow stale and stagnant. Your buyers can appreciate price cuts and a much better stance for negotiation—perhaps now those sellers will replace that HVAC unit to keep the deal moving.  

Guidance for Buyers in a Buyer’s Market

There are a lot of advantages to purchasing a home in a buyer’s market vs a seller’s market. You’ll need to help your buyers be specific about what they want in a home—remember that in this market, you and your buyers have the upper hand in a negotiation! Agents must be diligent about analyzing comps, exploring available properties, and leveraging the number of days on market to help their buyers score a better deal.

📌   Pro Tip

Given first-time buyers’ challenges (especially in competitive markets), you must ensure you’re ready to make an offer. This means you’ve got a pre-approval in hand and that you understand the importance of being flexible. Need help? We have six must-have real estate buyer’s agent checklists ready for you.

Guidance for Sellers in a Buyer’s Market

For those sellers in a buyer’s market, you must be strategic about selling your home. That’s part of being a successful real estate agent, after all! We have some tips: 

  • Make your property stand out through marketing and continued outreach
  • Make those needed repairs
  • Depersonalize and declutter
  • Price competitively and perhaps even offer seller concessions in negotiations

Impacts on Real Estate in a Seller’s Market

In a seller’s market, bidding wars are common and new listings can be rare. When a new listing hits the market, you’ll see multiple showings and possibly multiple offers in just a few days. In the current real estate market, with housing supply at record lows, buyers scramble to see a home and offer as quickly as possible. 

Guidance for Buyers in a Seller’s Market

Listen: Buyers in a seller’s market may experience challenges. But that doesn’t mean homes aren’t selling. As an agent, you are your client’s trusted adviser. There should be a sense of urgency with your buyers. You need to help them with strategy and help them avoid settling for less than what they want. That’s one of the pros of being a real estate agent!

  • Your buyers will need to act fast.
  • There may be disadvantages, like limited inspection objections and cash offer competition. 
  • Coach your buyers to remain patient. The perfect home may not be available, but you can find one that checks your most important boxes. 

Guidance for Sellers in a Seller’s Market

For your sellers, it’s imperative that you price appropriately. Some sellers may want higher or lower prices to game the market for a multiple-offer scenario. Some agents may be reluctant to disclose other offers and terms to buyers and their agents, but the REALTOR Code of Ethics doesn’t prohibit that disclosure. It’s best to be transparent about the offers you’ve got in hand. Of course, as always, note that in some cases, state law or real estate regulations could limit your ability to disclose terms of an offer. Always check with your local regulatory board. 

In a competitive market, you’ll need to work to market the property to help it stand out. You’ll need to generate that interest in your property. Don’t forget the importance of preparing your home. And if you need help thinking outside the box, we’ve got lots of tips for real estate marketing for listings.

📌   Pro Tip

Sellers can get frustrated when their listing sits on the market, waiting for a buyer. You might need to be flexible to stand out in a market flooded with options. For agents, offering advice on cost-effective improvements, staging tips, and accurate pricing is essential. To help, we’ve put together our ultimate real estate listing marketing checklist.


Bringing It All Together

Navigating the real estate market can seem tough, but knowing whether it’s a buyer’s market versus seller’s market makes a big difference. I have to caution that timing the market is tricky. However, strategic actions based on market conditions are exactly how to create a successful “win” for your client. Your job is to ensure you know how to look out for (and how to make) smart decisions. After all, the house you looked at today and wanted to think about until tomorrow may be the same house someone looked at yesterday and will buy today.

Remember that every neighborhood can be different, and things out of our control play a big part—like interest rates. But by keeping an eye on those details, you can make choices that work best for you and your clients. Now that you’re armed with this knowledge, you should be able to answer confidently when people ask, “How’s the market?

Want More Leads? Download Our Free E-book
61 proven lead gen ideas from coaches & top-producing agents to help you close more deals.
This email address is invalid.
Want even more free resources?
Tell us about you so we know what to send.
By downloading, you’ll automatically subscribe to our weekly newsletter
Want More Leads? Download Our Free E-book
61 proven lead gen ideas from coaches & top-producing agents.
By downloading, you’ll automatically subscribe to our weekly newsletter
Want even more free resources? Tell us about you so we know what to send.