What Does Guide Price Mean?
When comes to buying a property, more than once you have seen the term “guide price” listed on that property advertisement. If you have ever wondered what is a guide price on a property, here is everything you need to know.
When comes to selling a property, usually the estate agent would use the term of guide price as an intent to let the buyer what his client thinks their property is worth. So, a guide price is usually the minimum amount a seller wants for their house.
If you are a buyer and see a guide price saying “£300,000 – £350,000“, that would bring more confusion to what you actually should offer. That is why, the term “guide price” is not always a clear indication of what the seller is expecting to get; however, is worth starting you negotiations at the lower end of that guide price.
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Normally, the guide price term is used in auctions to indicate to the buyer how much they should roughly expect to bid. A guide price does not necessarily reflect the final sale price because other factors will come into play, such as the desirability of that item, the number of participants, etc.
Definitely NOT. The guide price tag is used by an estate agent, as a tactic, to bring interest in that property. Showing a lower guide price figure will make the property more attractive to buyers.
Keep in mind, that in some situations, the guide price can be an indication of significant flaws being present. Normally, you will see a guide price tag in fixer-uppers than in newbuilds.
By its definition, a guide price is just that – a guide. The property might sell for a lower figure than the guide price – or it might be purchased with an way over its guide price. The final sale price depends on multiple factors.
Again, a guide price tag is used just to indicate roughly how much a buyer should be expected to bid on that particular property.
The price you pay for a property is highly dependent on market behavior. We highly recommend doing your research before you decide to put an offer in. In most cases, the sale price will be lower than the asking price (not so much, post-pandemic).
If the guide price is the lowest figure the seller will take, you may find that a lower offer has a higher chance of being rejected. However, always be comfortable with your offer and budget accordingly.
As a buyer, you have the liberty to offer what you think the property is worth. However, if your research has shown that other similar properties in the area are sold with figures closer to the asking price then is a no brainer that you have better chances of offering that price.
Again, depends on the market and how many buyers are interested in that particular property. A general rule is to offer a lower price than the guide price, that way you will have room for negotiation and if the refusal is immediate will give you a sense of where you stand.
Offers in the region of (OIRO) – Exactly as it says but normally a wider band. A buyer may be tempted to try a cheeky low offer with this price qualifier.
Offers in excess of (OIEO) or Offers over – The seller is expecting offers over this price. This doesn’t mean some may consider an offer slightly under but most will want offers above this price.
Reserve price – Used in Auctions, a price when the bidding should start and nothing under this will be accepted. Sometimes the reserve price is confidential between the seen and auctioneer.
Price on application (POA) – which is used on high-end houses normally and basically indicates a high price tag.
We hope that our guide on “What does Guide Price mean” will be handy on your next house hunt and we can not stress enough how important is to get as much information as possible before you make an informed decision.
Is fair to say that a guide price is not necessarily the most accurate guidance when comes to what you should offer. The guide price needs to be seen as how much the seller wants for the property and this is not automatically how much they will get.