For much of the last decade, the real estate market has been…well, not really in the greatest shape. Home sellers have had to do everything short of staging a three-ring circus in the front yard in order to attract buyers, and throwing in their firstborn child to seal the deal.

Over the course of the past few years, though, there’s been quite the turnaround, to the point where in many parts of the country we’re now in what is known as a seller’s market.

So what, exactly, does “seller’s market” mean?

A seller’s market occurs when the demand for homes outpaces the available supply. One handy way to determine exactly when the market enters the “seller’s phase” is when the ratio of sales to listings hits 55-60 percent, or three sales for five listings. The opposite of a seller’s market is, of course, a buyer’s market, which is characterized by a ratio of fewer than seven sales per every 20 listings (below 35%).

What factors cause a seller’s market?

One major factor in spurring on seller’s market can be a drop in interest rates, which allows more people to qualify to buy homes, or to afford more expensive homes. Population growth and increased employment opportunities also bring more buyers into the market.

Yet another boost might come from new or expanded government housing assistance programs which allow for special low-interest loans, down payment assistance or tax credits for qualified buyers.

What are some signs of a seller’s market?

In a seller’s market, homes don’t stay listed for too long. Many homes sell in just weeks, while others take days or even hours. Many sellers even find themselves with the enviable problem of mediating a “bidder’s war”, with multiple offers coming in. Not surprisingly, some of these homes even sell for well over the listing price, as desperate buyers offer top dollar.

How does a seller take advantage of this market?

The best way to make sure you’re taking full advantage of a seller’s market is to work with an experienced Realtor. Your Realtor will help you know just how high you can price your home, and what offers are worth a second look. You’ll also need to cultivate some patience – if this is your first time selling a home, you may be tempted to jump at the first offer you get, but hold on just a little. If it’s a true seller’s market, you could well receive a higher offer tomorrow, and a better one the day after that.

Finally, if you’re needing to buy a home as well as sell one, look into the possibility of a lease back, where you arrange to rent your former home from the new buyer for a month or so. This may work well for a buyer who felt pushed into making a quick purchase in such a hot market, but still needs a little time to relocate.

But what if you’re planning to buy?

If, instead of selling, you’re wanting to buy a home, your first best step, again, is to find a good Realtor. A knowledgeable professional can help you find the right homes, at the right price, as soon as they hit the market, and to write a competitive offer. You should also make sure to be pre-approved, so the seller will know right away that you’re capable of backing up the offer you make.

If you can afford it, you can even include an escalation clause with your offer, specifying just how much you’re willing to come up with to top any competing offers. Even if you’re not made of money, it can help if you’re willing to be flexible with your move-in date. A seller may be willing to take your offer over another, higher one, as long as your timetable matches his own.