What Does Guide Price Mean When Buying a House?
In Simple Terms:
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Guide prices are flexible, allowing buyers to offer above or below depending on interest and competition.
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They are influenced by local trends, making them a key indicator of current market conditions.
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Sellers use guide prices strategically to draw interest and encourage competitive offers.
What Is a Guide Price?
A guide price is the price a seller hopes to achieve for their property and serves as a marketing figure to attract potential buyers. It’s typically the minimum amount a homeowner is willing to accept, giving buyers insight into the seller’s expectations and signalling that offers below this figure are unlikely to be considered.
Why Would Homeowners Want to Set a Guide Price?
Based on our experience, there are several reasons why homeowners choose to set a guide price, and it’s often a strategic decision shaped by market conditions and personal circumstances:
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Advice from Estate Agents: Estate agents often recommend setting a guide price to attract buyers while balancing the homeowner’s goal of achieving a fair sale price. The idea is to encourage interest, generate viewings, and ideally spark a bidding war. From what we’ve seen, this approach works particularly well when there’s some uncertainty in the property’s valuation or room for negotiation.
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Inconsistent Local Selling Prices: Market conditions and changes in the local area can make pricing unpredictable. For instance, rumours of a new development or economic fluctuations can cause prices to jump around. In our research, we’ve noticed this is common in areas where factors like school ratings or infrastructure projects are in flux, making it hard to pinpoint an exact selling price.
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Disagreements on Value: It’s not unusual for homeowners and estate agents to have different opinions about a property’s value. Homeowners might feel their house is worth more, while agents may set a more conservative figure based on market data. We’ve seen how guide prices can help bridge this gap, providing a middle ground that respects both perspectives while still attracting buyers.
Guide Price vs. Asking Price
There’s often confusion between guide prices and asking prices. A guide price reflects the minimum amount a seller is willing to accept, while an asking price is the figure they hope to achieve. From our experience, homes may sell for less than the asking price but rarely for less than the guide price. Understanding the difference helps both buyers and sellers set realistic expectations.
Expert Tip from a Property Expert:
“A well-set guide price creates interest and encourages competition. Sellers often fear pricing too low, but realistic pricing based on market conditions can attract multiple offers and even exceed expectations.
I always advise comparing your guide price to similar local properties. Buyers look for value, and the right guide price helps your home stand out and secure a strong sale.”
What’s the Difference Between Guide Price and ‘Offers in Excess Of’?
When a property is listed with ‘Offers in Excess Of’ (OIEO), it indicates that the seller will only consider offers above the stated amount. In contrast, guide prices are often published as a range or listed with terms like ‘Offers in the Region Of’ (OIRO).
How Is a Guide Price Set?
Setting a guide price depends on several important factors, all of which help make a property attractive to potential buyers. It’s about striking a balance between catching attention and staying realistic about what the market will bear.
Here’s what influences a guide price:
- Location: Location is one of the biggest factors in determining a property’s guide price. Homes in popular areas, close to schools, transport links, or amenities, naturally command higher prices. On the other hand, properties in less desirable spots may need a lower guide price to spark interest.
- Size and Layout: The size and layout of a home can have a big impact on its guide price. Larger properties or those with practical, well-designed layouts tend to justify higher prices. Features like extra bedrooms, spacious gardens, or even a home office can really add value and make the property more appealing.
- Condition of the Property: A property’s condition is another key factor to consider. Homes that are well-maintained or recently renovated are usually priced higher, while those properties in poor condition often have lower guide prices to account for the cost of repairs. From experience, we’ve seen how adjusting the price to reflect renovation costs can make a big difference in attracting buyers.
- Local Market Trends: Market conditions play a huge role in setting a guide price. In a seller’s market, where demand is high and supply is low, guide prices can be pushed higher. Conversely, in a buyer’s market, where there’s more competition between sellers, guide prices might need to be set lower to encourage offers.
Getting the guide price right is all about understanding these factors and using them to position the property in a way that appeals to buyers. It’s a balancing act, but with the right approach, it can make a big difference in how quickly and successfully a property sells.
Can You Offer Below a Guide Price?
Yes, you can make an offer below a property's guide price. In fact, many buyers start with an offer that’s 5–10% below to leave room for negotiation. While this is common, the seller’s willingness to accept a lower offer often depends on their circumstances, the level of interest in the property, and the local market conditions. If the property has been on the market for a while or there’s less competition, a lower offer might be more likely to succeed.
Guide Price and Mortgage Valuations
A mortgage valuation is an assessment of a property’s value, carried out by surveyors on behalf of lenders. It helps the lender determine if the property provides sufficient security for the mortgage loan. When setting a guide price, it’s usually a good idea to align it closely with the valuation. This can help ensure smoother negotiations during the selling process.
Related Read: What is a mortgage down valuation?
How Accurate are Guide Prices?
Guide prices are generally a reflection of the seller’s and estate agent’s expectations based on local market knowledge and recent sales of similar properties. However, they are not guaranteed and may not always match the eventual selling price, as market conditions and buyer interest can influence the final outcome.
According to Rightmove, asking prices for newly listed homes in early 2024 rose by 1.7% to an average of £366,189, though this figure remained £9,000 below the market peak in May 2023.
From our experience at Housebuyers4u, guide prices are often used as a marketing tool to attract buyers and create competition. While they provide a helpful benchmark, they’re not always a true indicator of a property’s value. We’ve seen cases where properties sell above or below the guide price, depending on demand and the seller’s circumstances.
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