Seller's Market

Definition

The term seller's market is used to describe a condition whereby demand for an asset exceeds supply, thereby providing sellers with negotiating leverage. While a seller's market can apply to the sale of any asset, it's oftentimes associated with the real estate market.

Explanation

When the demand for goods or services available to the market is in excess of the supply of those same goods and services, the market is said to be a seller's market. A seller's market allows those looking to sell an asset with additional leverage when negotiating price. The reverse of a seller's market is a buyer's market, which is characterized by a surplus of sellers.

The idea of a buyer's or seller's market originates from the law of supply and demand, which states that an overabundance of supply will put downward pressure on price. Conversely, prices will increase when demand outpaces supply. When a real estate market is a seller's market, homes will take a shorter period of time to sell and buyers will typically offer more than the seller's asking price.

Related Terms

carrying charge market, equilibrium price, inverted market, fast market, buyer's market