Guide Price Meaning – What You Need to Know
When you’re buying a home, you may come across the term “guide price”. Understanding the meaning of the guide price is crucial, as it can provide you with a realistic starting point for negotiations. So, let’s uncover what it means, the difference between guide price and asking price and when it is commonly used.
What does guide price mean?
A guide price is used by estate agents and sellers to give potential buyers an idea of the property’s value. It is an estimated price range of what a property is expected to sell for.
However, it’s good to remember that a guide price is not a fixed price, nor is it a formal valuation. It merely serves as an indication of the seller’s expectations and it is a good starting point for negotiations.
What’s the difference between asking price and guide price?
An asking price is a more precise figure, it is the price at which a property is advertised for sale. It’s also the seller’s initial price expectation that may be subject to negotiations and adjustments during the transaction process.
The primary difference between a guide price its meaning and an asking price lies in how a property is being sold. Guide prices are typically associated with selling a home at auction 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, where the seller is looking to sell their property quickly.
An auctioneer establishes the guide price in consultation with the seller, considering the seller’s reserve price, which signifies the lowest amount the seller is willing to accept for their property. The guide price serves as an estimate of the price that the property is expected to fetch at auction, giving bidders an idea of what the seller is looking for.
In auctions, buyers compete by placing bids on the property. The highest bid wins. This means the final sale price can go higher than the guide price if there is strong interest and competition among bidders.
How is a guide price determined?
Estate agents typically set the guide price for a property, especially when it is being marketed for sale. They consider factors like:
Market trends
Current market trends heavily influence the guide price of a property. Agents often look at the overall demand and supply in the housing market and take economic factors into consideration. They also look at recent sale prices of similar properties in the area.
Property condition
The state of the property itself is a significant factor. 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.
This pricing strategy is more commonly employed for fixer-uppers rather than pristine new-builds. As these are often fit with modern amenities and can fetch higher guide prices. While properties needing substantial repairs or upgrades may have lower ranges.
Location
The location is a critical factor in property valuation. Proximity to schools, public transport, shops, and other amenities can noticeably impact the guide price. Desirable neighbourhoods naturally demand higher prices.
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.
FAQ’s guide price and its meaning
Is the guide price the final selling price?
No, the guide price is an estimate. The final selling price can be higher or lower, depending on the negotiations between the buyer and seller.
Can the guide price change?
Yes, the guide price can be adjusted based on changing market conditions, buyer interest, or feedback from property viewings.
Can I offer under the guide price?
This depends on your assessment of the property’s value and your budget. Offers can be made above or below the guide price, but it’s essential to be realistic and prepared for negotiations.
Do all properties have a guide price?
Most properties listed for sale will have a guide price, especially in competitive markets. However, some properties may be listed with a fixed price or an offer above a certain amount.
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Last Updated: November 1st, 2024
