What’s the Difference Between a Buyer’s and Seller’s Market?

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Buyers and Sellers Markets

Buyer or seller? Who has control?

Perhaps you’ve overheard conversation between those in real estate talk about this being a “Seller’s” market. Do you know what that means? The terms “buyer’s” or “seller’s” markets are often used when describing the current climate in the real estate world.  But what does that mean exactly?  What is the difference between a buyer’s and seller’s market and which one is better? Bottom line, it’s about supply and demand.

To better understand here’s a quick breakdown of each to give you a snapshot of what each “market type” means and who it favors.

Buyer’s Market

This occurs when there is an excess SUPPLY of real estate for sale, so the buyer has more properties to choose from, which means more negotiating power and generally a better price and terms for the buyer.

Advantage:  BUYER – lots of choices, lots of power with negotiating in pricing and terms, and can the buyer ask for closing costs, repairs and closing dates of their choosing.  Sellers are generally more willing to settle on a price just to sell their home and be done with it.

Seller’s Market

This occurs when there is an excess demand for real estate.  Often times due to low interest rates, there are numerous buyers and not enough homes to choose from on the market.  Sellers can demand higher prices and control a lot of the terms in the transaction.

Advantage:  SELLER – can get top dollar for a property in good condition, often times getting multiple offers and selling for more than the original asking price.  The seller is also less likely to pay for closing costs or have to do repairs requested by the buyer (because another buyer is waiting in the wings).

There are cycles in the real estate world and obviously we would all prefer to be on the advantageous side of any real estate transaction and avoid having to do anything if/when the housing bubble bursts again.  But sometimes you can’t wait it out until it’s a seller’s marker – you are forced to sell when the market isn’t in your favor.  Or on the buyer’s side, you may out of necessity, have to buy when the prices are high and demand is low.   Regardless of what kind of market you’re in or if you’re trying to buy or sell, future generations of homeowners should remember the basic differences between a buyer’s and seller’s markets and exercise sound judgment when it comes to buying or selling their home.

The Minnesota Association of REALTORS® is the largest professional trade association in the state with more than 17,000 members who are active in all aspects of the real estate industry.


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