Everything you need to know about property auction Guide Prices
The pricing structure for auction properties is quite different to those set by estate agents. Estate agents usually quote an asking price and auctioneers usually quote a ‘guide price’ or a ‘guide price range’. The key difference is that a vendor selling through an Estate Agent is likely to accept an offer on the property at the asking price and sell the property, at auction the bidding may go well above the guide and reserve before being sold to the highest bidder.
Auction pricing terms
2. Reserve price
3. Sold prices
Understanding the key differences between these pricing terms and how they relate to each another is an important part of buying successfully at auction. Now, lets go through each pricing term individually to clarify what you need to know.
1. The guide price
Understanding what the Guide Price means when looking to buy or sell at auction in relation to calculating the market value of a property and working out your maximum bid is key to setting a successful bidding strategy.
Occasionally lot details may not have a guide price and can show the guide price as ‘Refer’, ‘Awaiting’ or ‘No Guide’. This is more likely to happen in the early stages of the marketing process when the auctioneer is still determining the reserve price, this will usually be updated prior to the auction date.
2. Reserve price
The reserve price is usually set at a level that achieves a balance between being set low enough to encourage buyers to see the guide price as an opportunity to get a good deal on a property thus encouraging greater interest in the lot, whilst also not being set too low as to undersell the property if there is limited bidding interest on the day.
There is a balancing act to setting the right Guide Price for an Auction Property as when selling at auction a vendor is hoping to get the highest price possible and to achieve that an Auctioneer is looking to generate as must interest as possible by advertising the property with a favourable guide price that appeals to a wide audience of potential buyers.
3. Sold Prices
The difference between the guide price versus the selling price can be marginal or significant as it depends on the popularity of the property at the time of the auction where so many different factors come into play. Also, all the associated costs and fees need to be added to the sold price to reflect the true cost.
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