Real estate is a cyclical business. For months or even years conditions may favor the buyer. Then, over time, the pendulum will swing the other way and circumstances will favor the seller.

The market forces of supply and demand help determine whether it is a buyer’s or seller’s market. When the supply of homes is high, the sense of urgency for buyers lessens. Because there are more homes to choose from buyers can be more selective and may wield more power during the negotiations. In turn, sellers may need to lower their asking prices to attract consumer interest.

Conversely, in a seller’s market, inventory is lower. Buyers have fewer options and the sense of immediacy is heightened. As a result, the number of bids on any given listing may increase, asking prices might rise, and buying terms may become more stringent.

A second factor that influences the market is mortgage interest rates. High rates mean it costs buyers more money to borrow from a bank or lender. Higher rates can lessen consumer demand. On the other hand, when rates are lower and buyers feel they can get more for their money it can propel them into the real estate market.

If you are considering buying a home it is critical that you determine whether it is a buyer’s or seller’s market. Equally important is to remember that real estate is local. Different factors could make it a seller’s market in one city and a buyer’s in another. To help you determine which conditions prevail examine how long listings are staying on the market, compare that rate to six months ago, and look at whether homes are selling above or below asking price.

Your real estate agent should be an expert in your local marketplace. His or her insight will be key. Remember the market climate – buyer or seller - will ultimately influence your decision when to buy and at what price and terms.