Buyer’s or Seller’s Market: What do these words really mean?

It may be hard to believe, but we’re a few short weeks away from spring. As many of us know, spring is also traditionally known as homebuying season – though we argue that any time can be the right one to buy or sell a home.

With that in mind, we wanted to dive into what “buyer’s market” and “seller’s market” actually mean. When it comes down to it, these terms describe the balance of supply and demand in the housing market, influencing pricing, negotiation power and overall strategy for both buyers and sellers.

On the surface, the words are self-explanatory.:

• Buyer’s market: This occurs when the supply of homes exceeds demand. With more properties available than there are buyers, homes tend to stay on the market longer, and sellers may need to reduce prices to attract offers. Buyers have the advantage of often negotiating better deals and more favorable terms.
• Seller’s market: This happens when demand outpaces supply. There are more buyers than available homes, leading to quicker sales and often at higher prices. Sellers hold the leverage, frequently receiving multiple offers, sometimes above the asking price, and can be more selective with terms.

Key considerations for Realtors and buyers/sellers

In a buyer’s market:

1. For Buyers: Take advantage of the ample inventory by thoroughly exploring options. With less competition, there’s more time to assess properties, negotiate prices, and request contingencies such as repairs or seller concessions.
2. For Sellers: Expect longer listing periods and be prepared to make your property stand out. Competitive pricing, professional staging, and minor renovations can make a significant difference. Flexibility in negotiations, like offering to cover closing costs, can also attract buyers. 

In a seller’s market:

1. For Buyers: Be ready to act swiftly. With high competition, getting pre-approved for a mortgage is essential to show seriousness. Consider making strong, competitive offers with minimal contingencies to increase the chances of acceptance. 
2. For Sellers: Leverage the high demand by setting a strategic price that is potentially higher than in a balanced market. However, overpricing can deter buyers, so it’s important to find the right balance. Multiple offers may allow for favorable terms, but it’s crucial to assess the strength of each offer, including financing and contingencies.

For Middle Tennessee, it seems to be mostly a seller’s market right now. Yes, affordability issues such as interest rates are still keeping some prospective buyers on the sidelines, but inventory remains tight. However, market conditions can vary literally by neighborhood, so we recommend connecting with an experienced Realtor to help you on your next buying or selling journey.

When you’re ready to start your next chapter, Birthright Title would love to be the title and closing provider you choose as you move into your home sweet home.