We often hear the terms "Buyer's Market" and "Seller's Market" when speaking about real estate. As with many things we purchase, the current market conditions tip the advantage to one side or the other. You are not likely to get a deep discount on a sport utility vehicle when consumers are buying them left and right, nor are you likely to get a favorable deal on a new furnace on January 2nd.  Real estate, like the SUV example, is driven by the number of consumers in the market.  1999 and 2000 have been strong Seller's markets because the number of buyers has outnumbered the number of sellers.

Supply and demand dictate the price of real estate. In a Seller's market (more buyers than sellers), the market is driven by the buyers most anxious to buy. If a buyer has lost out on two prior offers because multiple offers resulted in those homes selling for more than the asking price, that buyer is more likely to pay more the next time they make an offer. This can even result in a multiple offer frenzy where homes can sell for tens of thousands of dollars more than the Sellers are asking.

In a Buyer's market (more sellers than buyers), the market is driven by the sellers most anxious to sell. When few people are looking at homes, an offer represents a scarce chance for a seller to get on with their plans. With few other buyers looking at the home, the advantage clearly rests with the buyer.

It is not often that the real estate market is at one extreme end or the other. Most often the advantage to either buyer or seller will be only slight. In a balanced market (roughly equal numbers of buyers and sellers), a given buyers need to buy and a given sellers need to sell will have a greater impact on which side negotiates with an advantage.