haart's buying process guide:
Also take a look at:
The ‘guide price’ is the price a seller and estate agent hopes that a property will sell for on the open market. Guide prices are more often used in property auctions, for high value houses, or when there is discrepancy between an estate agent’s valuation and a seller’s expectations.
Guide prices are used to entice potential purchasers to make an offer. They are an idea of the price an owner hopes to achieve, but experienced estate agents will know the right level to set the guide price. A guide price is more of a ‘ball park’ figure. Too high and buyers will not show any interest; too low and the property will sell for less than what it could be worth.
Guide prices are commonly used when properties are being sold at auction. The guide price refers to the price at an auction house where the bidding will commence. Bidders will be invited to start bidding at the guide price in the expectation that competitive bidding will ensue and the guide price be surpassed.
Sales and marketing packs for properties will often include a guide price, to give potential buyers an idea of the figure the owner hopes to achieve.
Guide prices are very much at the discretion of the seller and estate agent. Guide prices are based on an estate agent’s knowledge of the local housing market, and the recent sales history of similar properties. They are different to ‘asking prices’. The asking price is the minimum figure the vendor will accept, and is usually privately communicated to the estate agent marketing the property. The guide price is usually slightly higher than the asking price.
A mortgage valuation is an estimate of how much a property is worth. These are conducted by surveyors on behalf of lenders to judge if there is enough security in the property to offset the risk in lending mortgage funds. When setting a guide price, it is often advisable to stay close to the valuation, as price negotiations are likely to be smoother.
Yes. Most bidders will start lower than the guide price, perhaps by 5-10%. Vendors will expect this, and judge whether to accept an offer based on how many competing bids there are. The more bids, the higher the price is likely to go.
If a property is listed with ‘Offers in excess of’, it usually indicates that vendors will only accept offers above the figure stated. The guide price will often be published as a range, or ‘offers in the region of’ (OIRO).
The ‘reserve price’ at a property auction is the lowest price that a property can reach during bidding for it to be able to be sold. If a property does not reach its reserve price it cannot be sold, even if it has attracted bidding. A reserve price is, for obvious reasons, usually lower than the guide price.
If you’re thinking of buying your next property, whether by auction or traditional means, haart will help get you moving.