How are guide prices valued at UK property auctions?

When thinking of buying a property at an auction in the UK, there’s a few things you need to understand before taking part, like what guide prices are and how they are valued.

At Mark Jenkinson we have decades of experience working with UK property auctions, so here’s our guide to everything you need to know about guide prices.

What is a guide price?

Firstly, it’s important to know that a guide price and a reserve price are not necessarily the same thing. The reserve price is the lowest value that the auctioneer can sell the property for, not accepting any bids below that. The guide price can be an indication of what the reserve price is, but is a public figure aimed to draw you in and make you want to bid.

According to the Advertising Standards Agency: “The auctioneer must provide an explanation that the guide price is an indication of the range within which or, in the case of single figure guide prices, within 10% of which, the minimum sale price will fall.”

So if the guide price is £100,000, the reserve price is not meant to be any higher than £110,000. If the guide price is a range, like £100,000-£110,000, the reserve price should be within that range.

The guide price is also not a valuation of the property, but should be seen more as a suggestion of what it could sell for if there was limited interest and competition at auction. That’s how it can work to tempt you (and everyone else) to get involved and start bidding, with the hope that the sold price will much higher.

As a general rule, properties are likely to sell for between 15-25% above the guide price, but this is dependent on several factors. Understanding how the guide prices are set can help you work out your bidding strategy.

 How are guide prices valued?

There are several aspects that are taken into consideration when valuing a guide price at a UK property auction. Auctioneers can use Comparative Market Analysis to look at recent sale prices within the location of the property to compare how it aligns with market trends, factoring in its size, condition and specific features.

Alternatively, they could request an independent valuation from a qualified surveyor or appraiser, while they’ll also be likely to get input from the sellers. However, the auctioneer will use their own experience to ensure that they aren’t led by unrealistic expectations that could backfire and put off potential bidders.

Factors like the location and condition of the property are key for setting the guide price as they’ll be indications of how popular it might be with bidders. So a well-maintained property in an area with high demand is likely to have a higher guide price than a ‘fixer-upper’ in an area in decline.

It’s also important to note that guide prices can be subject to change right up to and including the day of the auction. This could happen because the property has attracted a lot of interest - in which case the guide price might be raised in line with new expectations of what it could sell for - or because it hasn’t - in which case it might be lowered to attract more interest.

If you’re looking to sell, Mark Jenkinson can give you a free auction appraisal, advising you on the suitability and expected price you could achieve. Whether you’re selling or looking to buy, having a better understanding of guide prices will help you have a better chance of coming away from the auction happy.