Seller's market vs. buyer's market
In a seller's market, there are more buyers than homes for sale. Homes tend to sell quickly, sometimes with multiple offers, and buyers may ask for fewer repairs or concessions.
In a buyer's market, there are more homes than active buyers. Homes take longer to sell, buyers can be choosier, and price reductions, repair requests and seller concessions are more common.
Between the two is a balanced market, where neither side has a clear edge.
How to tell which market you're in
Months of inventory is the most common measure. It estimates how long it would take to sell all current listings at the recent pace of sales. As a general rule of thumb:
- Seller's market: under about 4 months of inventory, with quick sales
- Balanced market: roughly 4 to 6 months
- Buyer's market: more than about 6 months, with longer days on market
- Other clues: how often homes sell above or below list price, and how many listings have price cuts
Pricing in a seller's market
Price at market value, based on recent comparable sales. Strong demand can bid the price up, and a fair price tends to draw more buyers and better offers than an inflated one.
Keep in mind that the buyer's lender will still order an appraisal. If offers rise well above recent sales, an appraisal gap is possible, so review offer terms with your agent, not just the price.
Pricing in a buyer's market
Price sharply from the start. Buyers have choices, and a home that looks overpriced next to similar listings may sit while others sell.
Expect more negotiation. Buyers may ask for repairs or help with their closing costs. Deciding ahead of time what you're willing to offer makes those talks easier, and a well-prepared, well-presented home can stand out from the competition.
Why testing a high price can backfire
It's tempting to start high and see what happens. But interest is often strongest in the first weeks a home is listed. If the price is too high, buyers may skip it, the listing grows stale, and later price cuts can make buyers wonder what's wrong. In many cases the home sells for less than it would have with a well-set price from day one.
Getting local data
Market conditions vary by neighborhood, price range and property type, and they can change from one season to the next. Your agent can pull local inventory, days on market and recent sales, and prepare a comparative market analysis to help you set a price that fits the market you're actually in.
