A guide price is usually the minimum amount a seller wants for their house or how much the owner thinks their home is worth. You will find guide prices mostly being used at auctions, as they let potential buyers know roughly how much they’re expected to bid.
Our easy guide will tell you everything you need to know about guide prices – how and when they’re used, how accurate they are, and everything in between…
What is the difference between a ‘guide price’ and an ‘asking price’?
The guide price is the minimum amount of money that the seller decides their house is worth for the sale, in order to encourage potential buyers to develop some interest in the house, and allows them to gauge what to put the property on the market for by seeing what offers come in. The asking price, however, is simply the price that the seller actually puts the property on the market for.
When are guide prices used?
Guide prices are used predominantly at property auctions – they are usually a minimum price set by the auctioneer and seller to help bidders know what sort of offers the sellers are looking for.
However, you won’t just find guide prices in auctions. They are also used by estate agents in other circumstances. You will see guide prices on Rightmove, for example – they will often be lower than what the property will eventually sell for but just used to test the market. Sometimes they are used to gather some interest from the public, to encourage viewings and see how much people are willing to offer with a guide price, to then gauge how much to list a property for. They can also be used if there is a slight disagreement between the agent and the seller – a guide price can be used to set a starting figure to see if it should be raised or lowered when put on the market.
How accurate are guide prices?
You would usually trust that a guide price has been considered accurately with knowledge of the current market in mind. But it always helps to do your own research as well, so that you can identify what is an acceptable price to pay. It will be beneficial for you to do some research on local sold prices and properties similar to gauge an accurate figure.
Auctions tend to keep prices accurate in order to have a good selling success rate however, the guide prices can simply be made from the seller’s desirable price – so again, it’s helpful to do your own research so you know what a reasonable bid would be.
Can you offer less than a guide price?
Potential buyers can offer less than a guide price, but it’s not very likely that the offer will be accepted. This is because guide prices usually indicate the lowest price a seller is willing to list their house for or how much they think it is worth. Especially in the case of auctions, people will be bidding against each other to win a property, so, realistically, it’s not a great idea to offer lower than the guide price.
What other property jargons should you be aware of?
There’s lots of technical terms to keep up with when it comes to buying and selling – here’s some more you may want to be aware of…
Offers in the region of (OIRO) – This gives the buyer a rough idea of the asking price. It means that the seller would be thrilled to be offered something higher but are also willing to accept something a little lower. By saying ‘in the region of’, it lets buyers know that they are willing to negotiate offers around a certain amount.
Offers in excess of (OIEO) or offers over – This one is a little more self-explanatory and basically means that the seller would prefer offers over the specified amount and is unlikely to accept anything lower.
Reserve price – This is used with properties sold at auctions and is the agreed minimum amount at which the property can be sold – decided between the auctioneer and seller. The auctioneer is not allowed to sell the property for any bids below the reserve price.
POA – Meaning Price on Application or Price on Asking, this is when potential buyers are supposed to contact the estate agent for more information on the price, making a property slightly more exclusive.
How much is my property worth?
Are you thinking of getting your home on the market but not sure what you want to set your guide price at or how much it could be worth? Coming up with a figure can be difficult, and as we’ve discussed, it’s helpful to gather some existing market research on properties similar to yours in your local area. Or, you can simply book a free home valuation with us today to gauge an accurate figure.