Buyer’s Market vs Seller’s Market: How to Negotiate and Close the Deal

by EV Atlanta

Determining the right time to buy or sell a home – and the right way to negotiate – can be complex. Home prices can be influenced by mortgage rates, the number of available homes for sale, and the speed with which homes receive offers and go under contract.

Buyers and sellers have equal negotiation power in a balanced real estate market. However, it’s common for a market to favor either the buyer or the seller when it comes to home prices and the ability to negotiate favorable terms. We’ll help you determine if you’re in a buyer’s or seller’s market and provide strategies to help you close the deal in each scenario.

Is the U.S. Currently in a Buyer’s or Seller’s Market?

The U.S. is currently in a seller’s market due to low housing inventory and high buyer competition. According to the National Association of Realtors (NAR), the inventory of unsold existing homes is 4.2 months’ supply at the current monthly sales pace. A more balanced housing market typically has a six-month supply.

What Is a Buyer’s Market?

In a buyer’s market, buyers have the upper hand. The market trend is such that housing supply exceeds buyer demand, and buyers are more likely to see price reductions and often have more negotiating power. Homes sit on the market longer, and sellers must compete with each other to attract potential buyers. This could mean cutting prices to gain an advantage, and they are also more willing to negotiate to close the deal.

Here are signs that it’s a buyer’s market:

Inventory levels: In a buyer’s market, there is a larger selection of homes for sale. “When the total number of listed or available homes in a market exceeds six months on hand, it indicates relatively high inventory, thus a buyer’s market,” says Susie Proffitt, a real estate advisor with Engel & Völkers Atlanta. “The more ‘months on hand’ inventory, the stronger the buyer’s power becomes.”
Price trends: Declining or stagnant home prices indicate a buyer’s market. Sellers are more willing to reduce the asking price to attract buyers.
Days on the market: This refers to the number of days a home has been for sale, from the listing date to the signed contract. If homes start to spend more days on the market, it suggests a buyer’s advantage.
Buyer leverage: Buyers have more negotiating power in a buyer’s market. “Buyers can also be a little more demanding when it comes to the terms of the sale,” says Desiree Avila, a real estate agent in Fort Lauderdale, Florida. “For example, buyers can usually offer less than asking, ask for concessions after the inspection or for money toward closing costs.”
Seller concessions: Seller concessions, including repairs, closing cost assistance, home warranties and more, may be used to attract buyers by reducing their overall cost.