Planning to buy or sell a property in the UK? Then you may have come across the term “guide price”. But what is the meaning of guide price, and why is it used when selling a property? Keep reading to find out.
What is the meaning of guide price?
A guide price is an estimated price range within which a property is expected to sell.
It’s used by estate agents and sellers to give potential buyers an idea of the property’s value.
It’s important to note that a guide price is not a fixed price, nor is it a formal valuation. Instead, it serves as an indication of the seller’s expectations and provides a starting point for negotiations.
How is a guide price different to an asking price
An asking price is the price at which a property is advertised for sale.
It’s the seller’s initial price expectation, and it is used as a starting point for negotiations between buyer and seller. Unlike a guide price, an asking price is a more precise figure that may be subject to negotiations and adjustments during the transaction process.
The primary difference between a guide price and an asking price lies in how a property is being sold. Guide prices are typically associated with property auctions while asking prices are more common in traditional property sales.
When is a guide price used?
A guide price is commonly used in property auctions. In these situations, the seller is looking to sell their property quickly and often at the highest possible price.
An auctioneer establishes the guide price, taking into consideration the seller’s reserve price, which signifies the lowest amount the seller is willing to accept for their property. In compliance with the Advertising Standards Authority (ASA) guidelines, the guide price must fall within a range of 10% above or below the seller’s reserve price.
Auctions are based on competitive bidding, where potential buyers place bids on the property until the highest bid is accepted.
Therefore, the final sale price at an auction may exceed the upper limit of the guide price, depending on the level of interest and competition among bidders.
How do estate agents use guide prices?
Occasionally, an estate agent may propose a relatively low guide price to generate interest in a property, boost the number of viewings, and secure a rapid sale.
When a property listing features a guide price, it may imply (though not always) that the property has considerable shortcomings.
How to interpret a guide price
Always remember a guide price is an estimated price or price range reflecting the seller’s expectations not the fixed price.
Remember that guide prices may sometimes be set at a lower level to generate more interest in the property, leading to increased viewings and potentially a quicker sale.
As a potential buyer, you should conduct thorough research using a Move iQ property report and assess comparable properties in the area to better understand the property’s true market value.
Also, be prepared for the possibility that the final sale price may exceed the upper limit of the guide price. This is especially true in competitive situations like property auctions or highly sought-after locations.
By carefully evaluating the guide price in the context of the broader local market, you can make more informed decisions when considering whether to make an offer or not.
Last Updated: November 28th, 2023