A seller's market occurs when the demand for goods or services exceeds the supply available. In this situation, sellers have the advantage because buyers compete for limited options, often leading to higher prices. This scenario is common in real estate, where homes are in high demand but few are available for sale. In a seller's market, buyers may face bidding wars, where multiple offers are made on a single property, driving prices up. Sellers can often negotiate better terms, such as higher sale prices or fewer concessions. Understanding this market dynamic is crucial for both buyers and sellers in making informed decisions.