A buyer's market occurs when the scales of supply and demand tilt in favor of the buyer. This means that buyers can have more bargaining power to get a lower price from the seller. If there are more homes available than there are buyers, the buyer has a better chance of getting the offer they want. There are still far fewer homes for sale than there are buyers, leading to fierce competition, bidding wars and high sales prices.
A buyer's market refers to a situation in which changes in the underlying economic conditions that shape supply and demand mean that buyers have an advantage over sellers in price negotiations. When you're fighting for the same home with multiple buyers, you can stand out by demonstrating that you're financially capable of delivering on your offer. Anything that increases sellers' urgency to sell or decreases buyers' urgency to buy will tend to create a buyer's market. Getting pre-approved will show you exactly how much money you can offer and could put you in a better position than other buyers.
If you're not sure how to tell if this is currently a buyer's or seller's market, there are numerous pointers you can look for to learn about current housing conditions. Buyers may be forced to overpay for a home and buy it as is, which in some cases could be very harmful if something not found during an inspection is wrong in the home. Sellers can also lower the price they're asking more quickly and go further to ensure that the buyer doesn't disappear. One of the most significant differences when analyzing homes in a buyer's market will be the lower pressure to make an immediate decision.
A buyer's market means that sellers must work harder to sell their homes because there is more supply than demand. A buyer expected a home to be in excellent condition or at a reduced price and could often obtain a purchase agreement for less than the seller's asking price for the property. In a buyer's market, you have more inventory to choose from when you're looking for homes than in a seller's market when there's limited inventory. A seller's market exists when people who want to sell their homes have more bargaining power than potential buyers.
Sellers are likely to lower their sales prices in a buyer's market and raise them in a seller's market.