The guide price is the amount that a seller and estate agent believe they can achieve for a property if it is sold on the open market.
It is most common in property auctions, when dealing with expensive houses, or when the estate agent’s valuation differs from the seller’s expectations. To learn more about this topic, keep reading.
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Guide prices explained
Guide prices are used to encourage potential purchasers to make an offer. They are an estimation of the price the owner hopes to get, but experienced estate agents will know the right level to set the guide price.
A guide price is more like a ‘rough estimate.’ Setting it too high, buyers won’t show any interest; setting it too low, the property will sell for less than its worth.
When are guide prices used?
Guide prices are typically used when properties are being sold at auction. This guide price is the starting point for bidding, which is expected to exceed the guide price.
Sales and marketing packs for properties often include a guide price. This gives potential buyers an indication of the figure the owner is hoping to achieve.
How accurate are guide prices?
Guide prices are entirely dependent on the seller and estate agent. Estate agents typically base guide prices on their knowledge of the local housing market and recent sales of similar properties. Asking prices are different from guide prices.
Asking prices are the least amount the seller is willing to accept and are usually discussed privately between the seller and the estate agent. Guide prices are typically higher than asking prices.
Guide prices and mortgage valuations
A mortgage valuation is an appraisal of the worth of a property. Surveyors carry out these assessments on behalf of lenders to establish if the property is secure enough to cover the risk of lending mortgage funds.
It is sensible to set a guide price close to the valuation, as it will make for simpler price negotiations.
Can you offer lower than the guide price?
Most bidders will start below the guide price, usually by around 5-10%. Sellers anticipate this, and decide whether to accept an offer based on the number of competitive bids. The more bids there are, the more likely the price is to rise.
What is the difference between guide price and ‘offers in excess of’?
When a property is listed with “Offers in Excess of,” it means that vendors will only accept offers higher than the stated amount. Usually, the guide price will be published as a range or “Offers in the Region Of” (OIRO).
Guide and reserve prices at property auctions
The reserve price at a property auction is the lowest amount that must be reached in order for the property to be sold. If the reserve price is not met, the property will not be sold, even if there is bidding for it. Generally, the reserve price is lower than the guide price.
How is the term guide price used by estate agents?
You’ll come across the term “guide price” in regular property listings. It’s like an auction price – it could be one figure or a range. This is based on the least amount of money the seller is hoping to get, as well as the estate agent’s knowledge of the local area and property market.
Sometimes estate agents set low guide prices to generate more interest in a property, as well as to encourage more viewings and a speedy sale.
When a regular property listing has a guide price, it often means that it has some major issues. It’s usually used for fixer-uppers, rather than sparkling new builds.
What other jargon do estate agents use?
Potential lingo you could come across in property listings include:
- OIRO, which stands for ‘offers in the region of’ and generally implies that the seller is ready to negotiate.
- OIEO, on the other hand, stands for ‘offers in excess of’ and indicates that the seller won’t accept anything less than the asking price.
- Lastly, POA means ‘price on application’ and is likely to be seen when looking at the upper end of the housing market.
Should I pay the guide price?
Ultimately, it’s important to consider the market and how much someone else is willing to pay for a property. If the guide price is the least amount the seller will accept, then lower offers may not be accepted. If you’re unsure, it’s a good idea to ask the estate agent to see if the seller will accept less.
That said, if you are really in love with a house, it’s worth making an offer, even if you can’t quite reach the guide price. At the end of the day, the worst the seller can do is say no.
How do I decide on the guide price when selling my home?
To get an accurate idea of the worth of your home in the current property market, it’s a great idea to get valuations from multiple local estate agents. They can guide you on the asking price or guide price, but ultimately the decision is yours.
Can guide price be trusted?
In most instances, a guide price is determined with the market in mind and will be an accurate representation of properties in the vicinity. However, there are times when this isn’t the case, so it is essential to do your research before making any offers.
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