How accurate are guide prices at property auctions?

Guide prices at property auctions are meant to provide an estimate of the value of a property and to attract interest from potential buyers.

 

How accurate are guide prices at property auctions?

 

They vary in accuracy due to market conditions, property conditions, bidding competition, valuation methods, and reserve prices. They’re a starting point; thorough research and consulting professionals are crucial before bidding.

 

According to a 2018 analysis by Essential Information Group (EIG), the average difference between the guide price and the final sale price for residential properties in the UK was 14% above the guide price.

 

Guide price accuracy can vary for several reasons:

 

1. Market conditions:

 

The guide price may not accurately reflect the current market conditions or recent comparable sales in the area. Market fluctuations and local demand can lead to final sale prices that are significantly higher or lower than the guide price.

 

2. Property condition: 

 

The guide price may not take into account the full extent of any necessary repairs or renovations, which could affect the final sale price.

 

3. Bidding competition: 

 

The level of interest and competition among bidders can greatly impact the final sale price. If multiple bidders are highly interested in the property, the final price can exceed the guide price significantly.

 

4. Valuation methodology:

 

Different auction houses and valuers may use different methods to determine guide prices, which can lead to varying levels of accuracy.

5. Reserve price: 

 

The guide price is often set below the reserve price (the minimum amount the seller is willing to accept) to generate interest. This means that the guide price may not necessarily reflect the true value of the property or the final sale price.

 
 
 
 

Psst! 🤫 We’ve got a cosy little corner on our website where we chat all about selling property at auction in the UK. From the ups and downs to those handy insider tips, it’s all in our Ultimate Guide to Selling a House at Auction. Why not pop over, grab a cuppa, and dive into the world of auctions with us?

 

Happy learning!