Property Market Intel

How Accurate are Guide Prices at Auctions?

1

Written by Lewis Ridley

Updated over a week ago

If you’re going to auction to buy a property, you might start to get excited about how low some of the properties are being offered. However, how reliable are these guide prices?

In a nutshell, it is common to add at least 10% to the guide price. This is because guide prices are set lower than the valuation to encourage bidding. A 10% increase will give you a more realistic figure.

Of course, it could always go for more than this. Some property investors will add as much as 20% to the price if the house looks like a bargain. Read to on to learn more about auction prices and what you should expect to pay.

How to Get a Mortgage for an Auction Property

What is a Guide Price?

A guide price is a figure that indicates the property’s value at the time it entered the auction. This figure is presented as either a single digital or a price range.

The guide price helps assist bidders by giving them more information about the property, helping them to decide whether they want to bid.

It is worth noting that the guide price you see before auction isn’t always set in stone - it can change. Depending on the interest displayed during marketing, it might go up or down.

How is a Guide Price Created?

The guide price on auction properties is determined using a number of factors. Many of which are influenced at auction, hence why they change so often.

However, more robust factors are taken into consideration before auction to come up with an appropriate guide price.

These include property features, such as age, bedroom number, roofing, and whether there have been any renovations by previous owners. Comparables will also be reviewed for similar properties in the area.

It’s worth noting the guide price isn’t the valuation, it is an indication of the price the seller wants for the property. In fact, the guide price will often be lower than the valuation to get people bidding.

What Other Prices Will You Find at Auctions?

As well as guide price, you’ll also discover other prices which might confuse the novice auction investor. Let’s run through some of the other basic prices you’ll come across when reviewing a property at auction.

Reserve Price

The reserve price is minimum price the auctioneer is allowed to sell the property. They are not authorised to go lower than what has been agreed prior to the auction.

If no one wants to bid on the property or bids don’t go high enough to meet the reserve price, the property will be pulled from the auction.

Sold Price

The sold price is the price at which the property sells for at auction. This will be whatever the highest bid was for the property.

Summing it up

The guide price at property auctions is fairly accurate as the valuation and other factors are taking into consideration when creating it. However, it is safer to add 10% to the figure to provide something more realistic.

If you want to learn more about auction properties and the process of buying an auction property, see our knowledge centre for more.

Related Reading

How to use a mortgage to buy a property at auction

Start your free 7-day trial

Find better investment opportunities & perform quicker due diligence from the one platform

Start today
If you have any questions or need any further information or just want a chat about the platform feel free to contact me.