Buyer's versus seller's market: what you need to know as a buyer or seller

Bulls and bears aren't just for the stock market — the housing market has its own ups and downs, including periods that favor buyers over sellers and vice versa.

The terms "buyer's market" and "seller's market" simply refer to the supply and demand between the number of homes available and the amount of people looking to buy homes.

• A buyer's market occurs when there are more homes available than people looking to buy (a surplus in homes available for potential homeowners).
• A seller's market occurs when there are more people looking to buy than homes available, meaning a seller can lean into their home's demand during the homebuying process.

Knowing which conditions are present during the homebuying or home selling process can help you know how to prepare. This is applicable for both buyers and sellers — and no matter which market you're in, you can use certain strategies to keep the process moving.

If you're looking to buy a home in a buyer's market, you may have more options available to you. But even in a seller's market, you have plenty of strategies at your disposal. No matter which market you're in, explore these three tips for buying a home in each market:

• Take your time finding the right home. Be prepared to make decisions and move quickly in a seller's market, as there will likely be more competition among rival buyers. However, don't lose sight of the end goal — you want your future home to be a good fit for your needs and your price range, even if the market is more competitive. In a buyer's market, you may have the luxury of time on your side, so consider your timing and your decisions wisely, either way.
• Get preapproved before making offers. Obtaining a preapproval can help strengthen your stance as a potential buyer and shows your intent to both lenders and sellers. The preapproval can give you an idea of what you can afford and which properties may be a good fit for your needs. Having that information up front may help you move through the process more quickly.
• Review comparable properties. In a seller's market, knowing what other homes are on the market can give you options in case your first offer is out-bid by another buyer — plus, seeing the price points out there may aid you in a negotiation with a seller. Having back-up options and knowing what homes are in the current market will better orient you to your circumstances, no matter if you're in a buyer's or a seller's market.

Don't let any market make you too stressed about your options as a buyer. Keep your ideas and options as open as you can, and be intentional about your needs and what you're willing to concede, if possible. If you're looking to crunch the numbers for your specific home purchase, you can help create your plan by calculating your borrowing power today.

On the other end of the spectrum, sellers can also leverage a few evergreen tips regardless of the market in which they want to sell their home:

• Develop a competitive pricing strategy. Work with a real estate agent to set a fair price for your home while staying competitive in the housing market. In a seller's market, selling your home may be easier than in a buyer's market because there are more buyers potentially vying for your property. In a buyer's market, you may have to balance your pricing strategy more conservatively, but talk with your agent about what options are available to help you to maximize your home's selling value.
• Make your home attractive. Price is just one part of your home's attraction to a buyer. Do all you can to make your home look physically inviting, especially as interested buyers begin to complete walk-throughs and consider making offers. Talk to your real estate agent about the importance of curb appeal, as well as the cost and benefits of home staging, repairs, and cosmetic updates to your home.
• Know how to choose your best offer. Know your limits on negotiations, and be ready to act quickly once you receive the right offer for your situation. Consider things like a potential buyer's closing timeline, flexibility, and earnest money (which you may see more often in a seller's market).

Whether you're in the market for a new home or ready to sell your existing home, Wells Fargo customers can enjoy exclusive access to features for both homeowners and buyers with this one-stop real estate shopping tool.