Selling your house at auction is a popular alternative to the open market.
You may need to learn what a guide price is when you do this.
The term is widely used in lots of contexts, including auctions.
Read on to learn how it works.
What is a guide price at auction?
In auctions, a guide price is the rough amount that an item will be sold for at auction.
In the context of property, the auction company will suggest the rough value that the owner expects. It’s to steer potential buyers, but it’s not binding.
Properties at auction will often sell for less than the guide price.
Guide price vs reserve price
A guide price is different from the reserve price. But both terms are used at auctions.
A guide price guides potential buyers on what an item may sell for.
The reserve price is the minimum amount the seller is willing to accept. Bidding will thus start at this figure.
Who decides the guide price at auction?
The auction company sets the guide price.
They’ll analyse the market and what you can expect from your house. This will usually happen in conjunction with the seller.
Selling via an auction generally takes 8 -12 weeks. The price for a property is set at the beginning of this period.
The auction for a certain property might only take a matter of minutes. During this time, a seller will find out if the price will change.
By contrast, negotiations over price on the open market generally take weeks.
Am I allowed to negotiate the guide price at auction?
As a seller, you can give the auction company your opinion. Whether they take this into account depends on their terms and conditions.
Some organisations will do whatever they think is best, and that’s part of the agreement. But others will compromise for you.
Buyers can’t debate the guide price. However, it’s not technically the same as the starting price. So, they can offer below this number if they wish.
Can I offer the guide price below at the auction?
Yes. A guide price is not the same as the ‘reserve price’. The latter is the minimum amount the seller will expect.
As long as the auction company aren’t using these terms interchangeably, you can bid from the ‘starting figure’ that’s set.
Speak to the auction house to confirm that these are two different numbers.
Do auction properties go for their guide price?
Sometimes, but not always. Bidding does not usually start at guide price. It begins at the ‘reserve price’, which is something else.
The guide price may align with what it eventually sells for. But it could be different, too.
Will a guide price ever be adjusted at the auction?
At any point before the auction begins, the guide price can be tweaked. This is usually to reflect changes in market conditions or interest levels.
This number isn’t binding, so there’s rarely harm in it being amended.
