Guide Prices in Property Auctions

When navigating the world of property auctions, understanding the terminology is crucial for making informed decisions. One term that often causes confusion for newcomers is "guide price." 

What Is a Guide Price?

A guide price in property auctions is an indicative figure provided by the Auctioneer that suggests the approximate value range where bidding might start or where the seller might consider selling the property. It's important to understand that the guide price is not the same as the reserve price.

The guide price serves as a starting point for potential bidders to gauge their interest and budget accordingly. 

Where a range is given, the reserve price will sit within that range and will not exceed the top end of the range. 

Where a single figure guide price is given, the reserve price will be within 10% of that figure.

The reserve price is typically confidential between the seller and the auctioneer, while the guide price is publicly advertised. A property will not sell if bidding doesn't reach the reserve price. Click for more information on “understanding reserve prices in property auctions”

Common Misconceptions About Guide Prices

• Misconception: The property will sell for the guide price.
  Reality: The final sale price is determined by competitive bidding and is usually above the guide price
• Misconception: The guide price is the minimum acceptable price.
  Reality: That's the reserve price, not the guide price.
• Misconception: Guide prices are legally binding.
  Reality: They are indicative only and subject to change before the auction. 

Guide Price Changes

Sometimes guide prices change before an auction. These adjustments can provide valuable insights:

• An increased guide price might indicate strong pre-auction interest
• A reduced guide price could suggest the seller is more motivated to sell

Monitoring these changes can help you gauge market sentiment and adjust your bidding strategy accordingly.