Buying Property at Auction: The Guide Price explained
Guides are provided as an indication of each seller’s minimum expectation, they are not necessarily figures which a property will sell for and may change at any time prior to the auction.
Since June 2014 auctioneers have to define the guide and reserve, typically it is an indication of the seller's current minimum acceptable price either prior to or at auction. The guide price or range of guide prices is given to assist interested parties in deciding whether or not to pursue a purchase.
It is usual, but not always the case, that a provisional reserve range is agreed between the seller and the auctioneer at the start of marketing. As the reserve is not fixed at this stage and can be adjusted by the seller at any time up to the day of the auction in the light of interest shown during the marketing period, a guide price is issued.
This guide price can be shown in the form of a minimum and maximum price range within which an acceptable sale price (reserve) would fall, or as a single price figure within 10% of which the minimum acceptable price (reserve) would fall. It is not a valuation and, as such, should not be relied upon by prospective purchasers who should obtain their own professional advice on values.
"The guide price is only an indication as to where the reserve is currently set and not necessarily the auctioneer's expectation as to what it will sell for."
What is a Reserve Price?
A guide price is different to a reserve price, a reserve is a figure below which the auctioneer cannot sell the property during the auction. Each property will be offered subject to a reserve which we expect will be set within the guide range of no more than 10% above a single figure guide. The reserve price is not disclosed and remains confidential between the seller and the auctioneer.
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By Beth Fox