A hot market is a "seller’s market". During a seller's market, properties can sell within a few days of being listed and there are often multiple offers. Quite often homes even sell above the asking price. In this type of market sellers that are also looking to buy a new home to move into find it a lot  less risky to buy before they sell although it is not usually advisable. Buyers during this period who want to get a "deal" on a home, reducing your offer by even a few thousand dollars could mean that someone else will get the home you desire.

A slow market is a "buyer’s market". During a buyer’s market properties may languish on the market for some time and offers may be few and far between. Prices may even decline temporarily. Such a market would allow you to be more flexible in offering a lower price for the home. Even if your offered price is too low, the seller is likely to make some sort of counter-offer and you can begin negotiations. Sellers are strongly advised to sell their home before they making any offers to purchase and if they do the offer must contain a condition that allows them to sell first.

More often than not, the market is simply "steady," or in transition. When a market is steady, no real rules apply on whether you should make an offer on the high end of your range or the low end. You could find yourself in a situation with multiple offers on your desired house, or where no one has made an offer in weeks.

Transition markets are more difficult to define. If the economy slows unexpectedly, as it did in the early nineties, people who buy on the high end of a seller’s market (like the late eighties) could find their home loses value for several years. So far, no one has proven reliable in predicting when markets change or how good or bad the real estate market will become.