Pop quiz: What’s the difference between a buyer’s market and a seller’s market? If you’re a newbie to the real estate game, you may not realize the stark difference between the two. If you’re considering buying or selling a house, you’ll want to add the definitions of both to your vocabulary to figure out when you’ll have your best shot on the market. 

What is a buyer’s market?

A buyer’s market occurs when supply exceeds demand, i.e. when there are more houses on the market for sale than there are people looking to buy. In this market, real estate prices decrease and homes tend to linger on the market a bit longer. This means that sellers must compete to attract buyers, whether that means dropping their asking price or being more willing to negotiate offers. 

A buyer’s market offers lower prices lower and fewer buyers to compete with. If you’re on the lookout for a new home during a buyer’s market, do your due diligence to find available properties in your area. Not only will this help you find your ideal home by sifting through all your options, you also can use this information as leverage when you’re negotiating a price. 

What is a seller’s market?

A seller’s market is the exact opposite. Seller’s markets mean there are more interested homebuyers than there are available properties. A low real estate inventory means more interest in available homes. Sellers can take advantage of their upper hand in the market and raise their asking prices. Since seller’s markets are more competitive, buyers are willing to spend more on a home than they would otherwise. This also means that buyers rarely have the power to negotiate and are more willing to accept properties as-is.

Over the last few years, we’ve been experiencing a seller’s market – especially in cities like Sarasota. Due to the housing shortage, these conditions often lead to bidding wars. During bidding wars, buyers will make competing offers and drive up the price, typically above what the seller initially asked for. 

While it may seem like certain seasons offer better conditions for buyers or sellers, the reality is that it mostly comes down to three things – the economy, consumer confidence and supply and demand. Whether you are interested in buying or selling a home, it is important to take note of the real estate market to make the best decision for you. If you’re considering entering the market in Sarasota, email me at amychapman@michaelsaunders.com.