Guide price is a term you often hear in the UK housing market.
For sellers, it’s an integral part of pricing a property to sell fast.
And for buyers, it’s something to understand before making an offer.
Read on to learn about what it is, how it’s created, and more.
Guide price: Definition
A guide price is a figure (or range) a property seller sets on listings to guide buyers towards a price they (the seller) are willing to accept.
It indicates the seller’s mindset. In most cases, buyers must make an offer near or at this figure to be considered.
After this, negotiations might lead to a different selling price.
Asking price & selling price
The other two most commonly mentioned prices in property are asking prices and selling prices.
An asking price is what the seller hopes to sell a house for. It’s their ‘aspirational’ figure.
It’s the most common type of price used by people selling their homes – the number you’ll typically see on Rightmove and in local advertisements.
Meanwhile, the selling price is the number that a house actually sells for.
It is typically only known after several weeks or months of viewings and negotiations.
Asking and selling prices are usually – but not always – different figures.
Selling prices are generally lower than asking prices. However, sometimes the opposite is true (e.g., in bidding wars and seller’s markets), but this is rare.
On average across the UK, the average asking price is £365,999. But the average selling price is £303,396.
This creates a difference of £62,602, which is around a 17.1% gap.
However, this average varies according to location. For example, one study found that the difference can be up to 25% in some places but only 7% in others.
And in almost all regions across the UK, the gap between asking and selling prices is widening.
Aspirational vs fixed
Guide and asking prices are aspirational and fluid.
Estate agents usually advise sellers what to set them at and they often change over time. This could be because of a lack of viewings or offers. Or it could be because they were initially too high.
By contrast, selling prices are fixed. They can only be known after sales have completed and can’t be retrospectively changed.
Estate agents setting asking prices too high
Some sellers go with estate agents that recommend higher asking prices.
This is a trick of the trade for estate agents to gain more business.
Ultimately, even a good estate agent can’t reliably gain a higher selling price simply by setting a higher asking price.
Why does a homeowner set a guide price?
Estate agent advises them to
Your estate agent may encourage you to set a guide price when selling your house.
This helps to avoid timewasters who can’t meet what you’re looking for.
And it might also start a bidding war by bringing more people into the negotiations.
Selling prices in the area are inconsistent
Sometimes, settling on a specific selling price for your house can be difficult.
Changing external factors can make the waters murky. So, in these cases, a guide price can stop you from feeling tied down to one specific number.
The owner and estate agent having different opinions
Sometimes, you’ll disagree with your estate agent about how much your house is worth. It’s often the case that they think sellers overprice their property.
You may then want to meet halfway by using a guide price. It’s a compromise that ensures both views are respected.
How do I know if the property I want is listed with a guide price?
If a house has a guide price, you will see this wherever it’s advertised.
This might be in local magazines or online platforms like Rightmove and Zoopla. You could also ask the estate agent directly.
If you’re looking for a house via auction, you will see a guide price as an amount set within 10% of the reserve price.
Or, you could see the price set as a minimum and maximum range where the guide price sits in between.
How is a guide price worked out?
There’s no set formula for calculating what your guide should be.
The homeowner and estate agent will usually assess several different things.
1. Economic conditions
The housing conditions when you list your property make a huge difference.
For example, if there are fewer buyers in the area, this reduces your negotiating power.
And you may be forced to drop your guide price. However, an active market can have the opposite effect.
2. Location
You should get an estate agent with in-depth knowledge of the local market.
This gives you insights into what similar properties nearby have sold for recently.
3. Property condition, size and appearance
Your house sells for more when it’s in excellent condition.
This can come down to simple things like how well it’s staged and larger issues like interior design and property condition.
