Humber/Ontario Real Estate Course 4 Exam Practice

Which is a key characteristic of a seller's market?

1. High interest rates.

2. Excessive property listings.

3. Limited number of buyers.

4. More buyers than available properties.

5. Increasing inventory of unsold homes.

6. Declining property prices.

The correct answer is: More buyers than available properties.

A seller's market is characterized by a situation where demand for housing exceeds the supply, which leads to more buyers than available properties. This condition typically drives up property prices, as buyers compete for limited listings. In a seller's market, sellers often have the advantage because they are likely to receive multiple offers, and properties can sell quickly, often at or above asking price. When examining the other choices, a high interest rate scenario tends to slow buyer activity rather than create a competitive environment. Excessive property listings indicate a buyer's market, where supply exceeds demand and prices may decline. A limited number of buyers also suggests a lack of competition, favoring buyers rather than sellers. Increasing inventory of unsold homes could reflect a market that is struggling, again indicating a buyer’s market context. Lastly, declining property prices typically occur when the market is saturated with sellers, as buyers have the upper hand in negotiations. All these factors clearly illustrate why having more buyers than available properties is a defining feature of a seller's market.