Guide price while buying a house

Ineneers

Hi,

If an agent says that a property has a Guide Price of 600,000 what does it really mean? Are they expecting a minimum offer of 600,000 or is there room for a lower offer? How low can the initial offer be to encourage further negotiation without putting the seller off?

Thanks

Guest101

Typically 10-15% is considered a serious offer.


However that's an unwritten 'rule' and many aspects affect it

Paully232000

do a little research on the area to see what similar properties have sold for, and then offer a bit less than that.

Depends, i guess, on what the area is and whether houses sell in a matter of days or languish on the market for months. Also, how desperate is the seller to sell, what they have to sell for (to pay mortgage/buy next house for eg) etc etc

HappyMJ

Ineneers wrote: »

Hi,

If an agent says that a property has a Guide Price of 600,000 what does it really mean? Are they expecting a minimum offer of 600,000 or is there room for a lower offer? How low can the initial offer be to encourage further negotiation without putting the seller off?

Thanks

You put in whatever offer you feel represents the value of the property. If your (guessing)£500,000 offer is refused you can still offer more if you really feel the property may be worth more. Seller's won't be put off negotiating even if your offer seems to them to be very low. They want a sale and £600,000 properties can be much harder to shift than a property worth closer to the national average.

Davesnave

Depends how long it's been marketed. Two houses I know locally have had guide prices of £380k and £500k.

The first recently sold at £330k and the other is still being marketed, now at offers over £450k.

This is fair enough, as both properties are one-offs and someone might have been willing to pay for their uniqueness at the original prices. However, no one did, so the vendors adjusted their expectations. A year ago they might have been less flexible.

Surrey_EA

It doesn't really have any specific meaning, as has already been mentioned, if it's a property you are interested in you should make an offer that represents what you think it is worth to you, based on your research of the market and what similar properties are selling for.

Some houses with a guide price of £600,000 will only sell for £500,000, others will sell for £625,000. It just depends on each separate set of circumstances, and how competitively (or not) the price has been set.

eddddy

It's worth asking the EA why the property has a 'Guide Price' rather than a conventional asking price.

Obviously, some EAs will give you a straight(ish) answer, and others won't. So you will still need to make a judgement.

But realistically, the EA wants to sell the property, and they might have a good idea of what the seller is likely to accept, how much interest there is in the property, etc - so it's worth talking to them (rather than treating them like an enemy).

Surrey_EA

eddddy wrote: »

It's worth asking the EA why the property has a 'Guide Price' rather than a conventional asking price.

The use of 'guide price' is increasingly common, and is probably a clearer description. As in, it's a guide to the price the owners are hoping to achieve for their property.

But I really wouldn't read too much into it.

eddddy

Surrey_EA wrote: »

The use of 'guide price' is increasingly common, and is probably a clearer description. As in, it's a guide to the price the owners are hoping to achieve for their property.

But I really wouldn't read too much into it.

Hmmm... EAs that I speak to tend to use 'Guide Price' for pretty specific reasons. For example,

It's a property with 'potential' and it's going to stay on the market for 4 or 5 weeks to see what offers come in (and they will sometimes add, "it's guide price was £x, but based on offers we're already getting, you need to be thinking of about £50k above that".)

Or...

There's disagreement between seller and agent about what the property is worth, so they both grudgingly agree to market it with a 'Guide Price'. (Seller is expecting more than that, EA is expecting less.)

Weave

I have almost completed on my purchase for a property that was on for offers over £575k and had been on for 6 months starting at offers over £630k. We went in at £550k then at £565k and seller came back saying they wanted £575k which is were we ended up.


The mortgage valuation survey adds another layer of complexity, if you are mortgaging, as they will only lend on what their surveyor values the property at. Ours came back at £575k which is reassuring.


If its been on the market for a while I would go in under the £600k with the view to paying £600k if it comes to it. Check Zoopla to see if there is any history regarding price reductions or recent sales of this property.

Ineneers

Thank you everyone. We have finally decided to not put in an offer as the guide price just seemed to be overly ambitious. Not sure there is any point starting a negotiation when a property has been clearly overvalued by a large degree.