What does guide price mean?
Conveyancer. Deeds. Equity. There are plenty of words to get to grips with as you navigate your way through the process of buying or selling a property.
One term that might keep cropping up seems simple at first – the guide price.
But what does the guide price actually mean? Does it simply mean the house’s price, or does it have a hidden significance? Let’s find out.
What does guide price mean?
The price of some things is non-negotiable. In the UK, you cannot walk into a high street shop, for instance, and attempt to haggle on the price of a pair of trousers. The price is set – and is inclusive of all fees, charges, and taxes.
A used car, on the other hand, is a little different. The price you see tends to have wiggle room, depending on how much profit the dealer hopes to make from the sale.
It’s similar with homebuying, where the guide price is just that – a guide. Although a prospective buyer can still make an offer at the guide price, it’s mostly there to give buyers an idea of the acceptable starting region that offers should fall into.
Guide price is sometimes referred to in terms like ‘offers in the region of’, ‘offers in excess of’ or ‘offers over’.
Is the guide price a starting point?
If you’re the seller, yes. This is especially true in ‘hot’ property markets where a desirable property can look to attract around a dozen offers.
In such cases, even if the offers start around the guide price, they usually increase as buyers realise there is competition. If a seller is fortunate, they might spark a bidding war where several buyers significantly increase their offers to secure the purchase.
You can think of the guide price as the lowest price a buyer is willing to accept. That said, this is subject to change – especially if many weeks have gone by without the seller receiving a suitable offer.
Remember, a slightly lower offer which has no onward chain can be more appealing to one a couple of thousand higher subject to a chain.
House prices are always up for negotiation, and it’s not unheard of for a house to sell for under the guide price. This doesn’t mean there is anything wrong with the property. It could happen for various reasons – for example, perhaps the house was overvalued, or the property market might suddenly plummet (global pandemic, anyone?).
Who sets the guide price?
The estate agents usually determine the guide price following a valuation of the house. This is an inspection that considers the property itself, the local property market, and the wider UK property market as a whole to accurately work out what the house is worth.
The seller has no obligation to accept an offer at the guide price, although many sellers take advice from their estate agents on this.
If you’re a buyer wishing to make an offer under – or at – the guide price, it’s always advisable to look at the local property market to get an idea of whether low-balling is a good idea. If you see similar properties nearby sold for lower than the guide price, you might have a case.
Can I protect my offer?
Remember, any offer you make on a house is not legally binding in law until the exchange of contracts. This means gazumping is always a possibility until the ownership of the property is legally transferred to you.
Having gazumping insurance in place will mean that if your offer is accepted and later rejected, you can claim back certain costs you’ve spent on the sale in the interim period. This could be anything from the cost of instructing a solicitor to mortgage lender’s fees.
Speak to Rhino Home Protect about our Home Buyer’s Protection Insurance today to find out how your house purchase can be protected from as little as £59.