When you peruse our stacked catalogue every auction, you might notice that our prices sometimes look a little different (lower) than the price of the same property when it was listed through an estate agent. This is because a guide price is different from an asking price, and for good reason. Here is everything you need to know about guide prices and why they’re used at auction.
What is a guide price?
A guide price is exactly as it sounds – a guide to what the property will be sold for. It gives potential buyers an idea of what the property is worth and can be a singular figure or a price range. This is often lower than the asking price, as it is the starting point for the bidding and not necessarily the price it will eventually sell for. The final price will be ultimately decided on auction day.
How is a guide price determined?
Guide prices are set by the auctioneer, seller, and an estate agent if applicable. It’s based on the extensive experience and knowledge of the housing market, the local area, and recent sales of similar properties. There are other factors that contribute too, such as the size of the property, the number of rooms, the condition it’s currently in and any potential to add value. As a seller, until the auction ends you don’t know exactly what your property will sell for because competitive bidding between determined buyers can deliver exceptional results. The job of an auctioneer is to apply their experience and knowledge to give the best, most accurate estimation and this must be agreed by the seller prior to marketing.
“Get the guide right, set a realistic reserve and watch your property fly at auction.”
Asking price vs guide price and reserve price
While guide prices are published and used in marketing, the sellers reserve price remains confidential. The reserve is the lowest price a property can be sold for. Occasionally a property will be sold with a disclosed reserve but this isn’t the norm.
Generally speaking guide prices are an indication of each seller’s minimum expectation. Network Auctions abide by the Advertising Standards Agency definition of a guide price which requires the sellers reserve price to be no more than 10% above a single figure guide or within the parameters of the band when a guide price band is used.
Are guide prices accurate?
In a Network Auctions catalogue, yes! We know that the best results at auction are generated by the most attractive guide prices. A look at our past results will show that while some properties are sold for far more than the original guide prices, others achieve their guide price or just over. The key to a successful outcome at auction is pricing a property at a level that’s acceptable to the seller and where multiple buyers will engage. Get the guide right, set a realistic reserve and watch your property fly at auction.
If you have any more questions about guide prices, or the price of any current lots, don’t hesitate to get in touch. We’re always on hand with friendly advice.