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What’s a Buyer’s Market in Real Estate? How to Tell (and Avoid Mistakes)

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Whether you’re buying or selling a home, it’s crucial to know how the real estate market is trending.

There are three types of real estate markets you may face:

  • A buyer’s market that favors home buyers
  • A seller’s market that favors home sellers
  • A transitional market that is fairly neutral

While national trends matter, it’s more important to know how the real estate market is leaning in your specific location. That’s why we recommend contacting a qualified local real estate agent who knows if now is a good time to sell — or whether it’s a mistake you’ll later regret.

What’s a Buyer’s Market in Real Estate?

Definition: There’s an abundance of homes for sale, giving buyers the upper hand in negotiating a favorable deal.
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A buyer’s market refers to a real estate market where the housing supply exceeds demands. In this type of market, the buyer has the advantage because they’re able to negotiate a low price more aggressively.

If you’ve been planning to purchase a home, waiting for a buyer’s market can help you:

  • Get more house for your money, thanks to lower purchase prices
  • Shop around and compare different houses, thanks to plentiful inventory
  • Negotiate a lower price, since sellers tend to be anxious to sell
  • Negotiate favorable contingencies, such as extra repairs

But if you’re a homeowner who plans to sell, buyer’s markets can be challenging. If your timeline allows it, we recommend waiting until inventory dips to give you a more competitive edge.

What’s a Seller’s Market in Real Estate?

⚡ Definition: There are so few homes available that buyers must compete — and typically pay more, give up contingencies, or both.
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A seller’s market is the opposite of a buyer’s market. In a seller’s market, there are typically more buyers than there are homes for sale. Since the supply is lower than demand, buyers are typically at a bit of a disadvantage.

The benefits are essentially the opposite of a buyer’s market. You’ll likely:

  • Earn a higher profit from your home sale
  • Experience bidding wars between interested buyers
  • Sell quickly, thanks to hot competition among buyers
  • Negotiate favorable contingencies, such as skipping an inspection

It’s not always possible to align your home sale with market fluctuations, but waiting for a seller’s market is ideal if you can swing it.

Transitional Real Estate Market

⚡ Definition: A balanced market in which supply and demand are fairly well aligned.
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A transitional real estate market refers to the interim period between a buyer’s or seller’s market. This period of time is generally pretty neutral, meaning it’s neither good nor bad for buyers and sellers.

During a transitional market, you can expect:

  • Sellers who “play the market” and wait for the perfect offer
  • Buyers who can shop around among a moderate number of homes

A transitional market isn’t advantageous to either party, making it a fine time to either buy or sell a home. This may be especially helpful if you’re a homeowner who needs to align the sale of your current home and your purchase of the next one.

Next Steps: Talk to a Real Estate Agent

You don’t need to be an economist to successfully buy or sell a home — you just need a great agent on your side.

A trustworthy real estate agent knows exactly:

  • How the market is trending in your area
  • How to weather challenging conditions
  • How to make the best of your next real estate transaction

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