POSTED 23 October 2018 General

What does 'Guide Price' mean?

A guide price indicates to a buyer how much a seller is looking to receive for their property. Using a guide price, as opposed to a concrete asking price, can help to increase interest in a property but if you go down this road you may need to be prepared to negotiate.

Why do you need a guide price?

As a home seller, you are under no obligation to set a guide price for your property, it is merely an option that you have at your disposal.

A property that features a guide price, rather than a set asking price, can attract more interest from potential buyers. This is because a guide price often incorporates a price range between two separate values. For example, a property may have a guide price of £200,000 to £225,000.

In this example, the property is likely to appeal to those who have a maximum budget of £200,000 and those who have a budget of £225,000, as well as everyone in between. The idea is that this will attract a larger cross section of potential buyers than a property advertised with a single fixed value.

In addition to being a marketing tool to attract more interest in a property, a guide price can also be used on a home that is difficult to value, such as a unique property or a property that has certain unusual characteristics.

Setting a guide price

If you want your property to have a guide price, you should alert your estate agent to this and they will be able help you to set a figure.

In general, the lower end of a guide price will be close to the absolute minimum that a seller would be willing to accept on their property. The upper end of the guide price meanwhile, is around the maximum that an estate agent thinks a property will sell for.

Bidding on a guide price

As we have mentioned, a guide price only gives a general idea of the amount of money expected for a property, so it can be a bit confusing to know where to start when making an opening bid.

The good news is that you’ve got plenty of leeway here because a fair bit of negotiation will be expected on the side of the seller.

That said, an opening bid below the lower end of the guide price is unlikely to be accepted. Ultimately, a first offer somewhere between the two values indicated by the guide price is probably a good place to start.

Going to auction

Although guide prices are used by sellers using estate agents, it is perhaps still more common for a property to have a concrete asking bid. Conversely, properties at auction have a guide price, almost without exception.

The trick with setting a guide price at auction is to pick a value that’s low enough to pique the interest of buyers but not too low so as to be unrealistic. If you’re selling at auction, the guide price will be set by you with the help of the auctioneer.