Struggling to buy a home in a seller’s market? This guide explains the essential steps to take, including the importance of pre-qualification, acting quickly, and crafting a winning offer to succeed against the competition.
Article: 4 minutes
Updated: June 21, 2026 Published: November 29, 2018
By: USAA Reviewed by: Editorial contributors
A seller's market occurs when there are more buyers than available homes. In a seller's market, buyers gain an edge by getting pre-qualified, acting fast on listings, avoiding lowball offers, and compromising on contingencies.
A seller's market is one in which there are more people buying houses than there are houses for sale. In addition to higher prices and the need to make quicker decisions, you're likely to face stiff competition from other house hunters. These nine tips for every step of the homebuying process can help you purchase your next home.
Ideally, you’d find yourself house hunting in a buyer’s market. That means there would be more available houses for sale than buyers, so buyers have the power to negotiate and get deals. However, in a seller’s market, the sellers have the leverage because there are fewer homes on the market.
Market conditions |
Housing inventory |
|---|---|
Seller’s market |
Low. There are fewer homes on the market than there are buyers |
Buyer’s market |
High. There are more homes for sale than there are buyers. |
Market conditions |
Home prices |
Seller’s market |
Rising. Homes often sell above asking price. |
Buyer’s market |
Dropping or stabilizing. Homes frequently sell below asking price. |
Market conditions |
Time on market |
Seller’s market |
Fast. Homes can sell in a matter of days or weeks. |
Buyer’s market |
Slow. Homes can sit on the market for months. |
Market conditions |
Negotiating power |
Seller’s market |
The seller has the power. Buyers often must waive contingencies and bid high. |
Buyer’s market |
Buyers have the leverage and can demand repairs and make lower offers. |
| Market conditions | Seller’s market | Buyer’s market |
|---|---|---|
Housing inventory |
Low. There are fewer homes on the market than there are buyers |
High. There are more homes for sale than there are buyers. |
Home prices |
Rising. Homes often sell above asking price. |
Dropping or stabilizing. Homes frequently sell below asking price. |
Time on market |
Fast. Homes can sell in a matter of days or weeks. |
Slow. Homes can sit on the market for months. |
Negotiating power |
The seller has the power. Buyers often must waive contingencies and bid high. |
Buyers have the leverage and can demand repairs and make lower offers. |
| Market conditions | Housing inventory |
|---|---|
| Seller’s market | Low. There are fewer homes on the market than there are buyers |
| Buyer’s market | High. There are more homes for sale than there are buyers. |
| Market conditions | Home prices |
| Seller’s market | Rising. Homes often sell above asking price. |
| Buyer’s market | Dropping or stabilizing. Homes frequently sell below asking price. |
| Market conditions | Time on market |
| Seller’s market | Fast. Homes can sell in a matter of days or weeks. |
| Buyer’s market | Slow. Homes can sit on the market for months. |
| Market conditions | Negotiating power |
| Seller’s market | The seller has the power. Buyers often must waive contingencies and bid high. |
| Buyer’s market | Buyers have the leverage and can demand repairs and make lower offers. |
Video Duration: 2 minutes 40 seconds
Buying a home can be challenging, but in a seller's market the challenge is increased. A seller's market means there are more people buying houses than houses for sale, often prompting sellers to bump up their listing price. You're also likely to face stiff competition from other house hunters like you.
Here are some tips for navigating a seller's market.
Before you start your home shopping, getting prequalified or preapproved with your lender will let you know just how much buying power you have. It also gives your bids more credibility, which helps in a competitive market. Set a firm limit on how much you are willing and able to spend. You might win the home in competitive bidding, but you'll also get years of strained budgets and financial stress, too.
Choose a sharp agent. In a seller's market, it's important to have the best players on your team. Find a real estate agent who not only has proven expertise in the neighborhoods you're interested in but is also highly responsive and efficient.
When the inventory of homes is limited, you probably can't afford to wait for the perfect house to hit the market. Don't be too choosy. For example, you can add a bathroom someday, but you can't change the home's location.
Consider new construction. You may find that new homes have more features and better pricing in these market conditions.
Keep a constant eye on new listings. Check in regularly with your agent and be quick to set up house visits. You'll need to be ready to make a fast go or no-go decision on houses you're interested in.
Don't lowball your offer. In a seller's market, if you want to be in the game, your bid should be close to if not higher than what the seller's asking. Up the ante. It's common for bidders to make earnest money deposits of 1% of the offer price along with your bid, which shows how serious your offer is. Subject to conditions, an earnest money deposit is refundable if the deal doesn't go through.
Put away your list of demands. Attaching conditions to your bid will weaken it. You should be prepared to accommodate the seller's needs, such as being flexible on the move-in date.
Finally, remember that a home decision has long-term impacts to your financial future, so don't get carried away with the pressure to buy, even in a seller's market. If your situation allows it, you might consider postponing your house purchase until the market cools down. But know that it's hard to predict when a market will shift. It could be years until conditions improve.
We hope that you found this information helpful.
For more on navigating a seller’s market, visit usaa.com/advice.
Description of visual information: [ This material is for informational purposes. Consider your own financial circumstances carefully before making a decision and consult with your tax, legal or estate planning professional.] End of description.
Ready to buy a home? Before you start browsing local listings, set yourself up for success with these tips.
In sports and business, it's important to have the best players on your team when facing fierce competition. In a seller's market, that means choosing the right real estate agent. You want someone who not only has proven expertise in the neighborhoods you're interested in but is also highly responsive and efficient.
By getting prequalified for a mortgage before you start home shopping, you'll know how much buying power you have. Your offer may have far more credibility than competing ones where buyers didn't take this step. The amount you are pre-qualified to borrow might be more than you're comfortable spending. It's important to know the monthly payment that fits your budget.
Once you’ve found an agent, it’s time to start looking at houses. Keep these tips in mind.
When the inventory of homes is limited, you probably can't afford to wait for the perfect house to hit the market. Prepare yourself to adjust your expectations. It makes the most sense to make exceptions to your criteria for things that can be changed. For example, you can add a bathroom someday, but you can't change the home's location or lot size.
You may start your search with an intention of buying an existing home. But you may find that new homes have better pricing or availability. You may have to weigh commute time if the new construction is farther away from your work or other activities.
In a buyer's market, you might get away with taking a leisurely approach to your home search. That's not going to work in a seller's market. Keep a constant eye on new listings and set up visits to houses you're interested in as quickly as possible. Be ready to make a quick decision so you can beat competing shoppers.
In a seller's market, submitting an offer that's well below the asking price is probably going to be a waste of time. Competing buyers often end up bidding above the initial asking price. If you want to be in the game, your bid should be close to if not higher than what the seller's asking. Talk to your real estate agent about the best pricing strategy.
If competitive bidding breaks out, it's easy to get carried away. If that happens, you may find that you not only get the home, but also years of strained budgets and financial stress, too. Before you start shopping, set a firm limit on how much you’re willing and able to spend.
Your relative lack of power in a seller's market doesn't just affect the question of price. It carries over to every other aspect of the deal, too. Think twice before attaching conditions to your offer, such as demands for changes to the home. Likewise, it may be a bad idea to insist on contingency clauses, such as making your purchase dependent on selling your current home first. To the contrary, you should be prepared to accommodate the seller's needs, such as being flexible on the move-in date.
If your situation allows it, you might consider postponing your home purchase until the market cools down. Of course, there are a couple of drawbacks to doing this. First, it's hard to predict when a market will shift and, depending on the economy and other factors, it could be years until conditions improve.
Finally, don't get carried away with the pressure to buy, even in a seller's market. Remember that a home decision has a long-term impact on your financial future. It may be better to let a house go than make a poor decision that's expensive to change.
Answer: A seller’s market is when there are fewer homes for sale than there are buyers looking to purchase a home. The shortage in homes means that buyers must compete against each other, giving sellers more power to demand higher prices and avoid contingencies and concessions. Homes often sell very quickly in a seller’s market.
Answer: When you’re buying a home in a seller’s market, you may have to consider raising your offer. Because there is more competition for the limited number of homes, you may find yourself in a bidding war, and, if you offer the asking price or lower, you might find your offer is rejected with no opportunity to negotiate.
In a seller’s market, buyers have less leverage to ask for contingencies and concessions. However, some contingencies may be non-negotiable for you, like if you need to sell your current home before closing on the new one. Work with your real estate agent to figure out what you need and how to get it, if you can.
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