What Is A Guide Price When Buying A House? | comparethemarket.com
You’ll come across plenty of confusing terms when you’re buying a house. OIRO, OIEO, POA… What do they all mean?
Guide price is another one. If you’ve ever wondered what a guide price actually is, here’s everything you need to know.
What does a guide price mean?
A guide price is usually the minimum amount a seller wants for their house. It’s how much the owner thinks their property is worth.
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When are guide prices used?
You’ll mostly come across the term ‘guide price’ at auctions. There it’s used so that buyers know roughly how much they’re expected to bid. Sometimes an auction guide price is the figure the seller won’t go below.
A guide price doesn’t usually reflect the final sale price, though – how much the property eventually sells for will depend on how things go in the bidding room.
Is the term ‘guide price’ exclusive to auctions?
No, it isn’t just used at auctions. You’ll sometimes come across it in ordinary property listings, which can be a bit confusing. Sometimes an estate agent will suggest a fairly low guide price to drum up interest in a property.
When an ordinary property listing has a guide price, it sometimes – but not always – means that it has significant flaws. You tend to see it used for fixer-uppers, rather than shiny newbuilds.
What other jargon do estate agents use?
Other lingo you might see in property listings include OIRO (offers in the region of) or OIEO (offers in excess of). On super-prime houses, you might see the letters POA (price on application), which basically indicates a sky-high value.
How to interpret guide prices
The term ‘guide price’ doesn’t always make it easy for you as a buyer, as you won’t know exactly how much to offer. Sometimes you’ll see the guide price as a range – say £400,000-£450,000 – in which case it’s probably worth starting your negotiations at the lower end of the scale.
How accurate are guide prices?
Generally, a guide price is just that – a guide. If you make a lower offer, the estate agent is legally bound to let the seller know. The seller will still consider your offer, especially if you’re in a strong position, such as not being in a chain or being able to pay in cash.
The property might eventually sell for a lower figure than the guide price – or it might sell for more. The eventual sale price depends on lots of factors, the major one being how much someone is willing to pay.
Should I pay the guide price?
The price you pay for any property will depend on what the market’s doing. You need to do lots of research and find out how much houses in the area are selling for. One way is to check websites like nethouseprice.com. This will tell you how much properties near you have actually sold for, rather than the asking prices.
If the guide price is the lowest figure the seller will take, you may find that lower offers are refused. If you’re not sure, it’s a good idea to sound out the estate agent to see how much the seller will accept.
How much lower than the asking price can I offer?
Again, this depends on the market and how many buyers are interested in the property. But as a general rule, it’s considered acceptable to offer 5-10% lower than the asking price. It’s worth remembering that if your initial offer is refused, you can always come back with a better one.
Can guide prices be trusted?
Not really. The guide price is how much the seller wants for the property – it isn’t necessarily how much they’ll get.
Ultimately, how much you have to pay for a property will depend on the market and how much someone else is prepared to pay. There’s a lot of luck and timing involved. If you fall in love with a house, it’s worth making an offer even if you can’t quite stump up the guide price. After all, the worst they can say is no…
Do I need a solicitor to make an offer on a house?
Not in England or Wales, no. You will in Scotland though – the rules are different there.