So you are ready to purchase a new home. It could be the first house or flat that you have ever bought. It could be your next family home with that extra bit of space. Or it could be a property that you are investing money in and plan on letting out as a buy-to-let. Regardless of what you are planning on doing with the property, each one will come with an asking price or a guide price. Now this is where it gets interesting and exciting for you as a buyer. Negotiating how much you should offer, what kind of discount or deal you might be able to get, and bidding for your dream home can all be quite enjoyable parts of the property buying process.
However, without knowing exactly what you should be offering and how to do it to be successful is definitely something that a lot of buyers are struggling with. In this blog, I will be exploring the difference between guide price vs asking price, best and final offers, how much you should be offering, and much more.
What Does Asking Price Mean On A House?
This is quite a simple one to be honest. An asking price on a property is how much the seller wants for the house. Normally this is decided in a collaboration between the seller, the valuer, and the estate agent. A valuer will come out and value the property and will feed this back to the agents and seller. Then the agent will either confirm or increase the asking price based on local knowledge and how much they think they can realistically sell the property for.
The seller can then either agree to the valuation and request that the property is listed at this price, or they can increase the value of the property themselves if they think it is too low. This is how an asking price is agreed upon. A lot of time and research goes into confirming an asking price, meaning that most of the time it is a pretty accurate valuation.
What Does Guide Price Mean On A House?
So, with that in mind, what does guide price mean when buying a house? UK selling agents and property websites like Rightmove will sometimes list a guide price on their site rather than an asking price. A guide price means the estimated minimum price that a seller will accept for the property. This guides buyers to where they might start making offers.
Knowing the guide price means that the property is potentially open to negotiations on price and can mean, for sellers, that potential buyers will bid for the property, potentially increasing the amount they get from the sale. A house guide price isn’t always based on a professional valuation and can often literally just be the minimum that the seller will accept for their property.
Guide Price Vs Offers Over
Now that we have answered the question ‘What is a guide price on a house?’, we can start looking at the ins and outs of making offers on properties. Normally when buying a property, people like to negotiate on prices. Sometimes people will use things like guide prices or asking prices to form their offer, and in many cases people will be able to get the property for a discounted amount.
However, a lot of times (especially in a strong property market), people will find themselves making offers over guide price or asking price. For example, if a guide price or an asking price for a property is listed at £200,000 and you offer £200,000 you might find someone else is willing to offer £210,000. If you are willing to offer £215,000 then you may secure the deal.
Should you offer asking price on a house? Absolutely, as long as you have carefully researched the property and the interest in houses in the area and this property specifically. If there is a lot of interest in a property, you may not want to offer the guide price or offer below the asking price as you may be immediately out bid.
Can You Offer Below Guide Price?
You certainly can try. And if the property is struggling to sell or doesn’t have much interest, you may be able to secure a deal! But remember that the guide price is generally the minimum that the seller is willing to take, so if you offer below this price you may get rejected. This is much more likely than offering under the asking price.
How Much Below Asking Price Should I Offer?
This really is a ‘How long is a piece of string?’ kind of question. There is no finite answer to this. Each property and each person is different. The most important thing to do is to speak with your mortgage advisor and also the selling agent to get a good idea of:
a) What you can afford
b) What is a sensible offer
Despite working for the seller, the agent will be able to give you some direction in your offers based on interest and other offers that have been received. Your mortgage advisor will know exactly what price you can afford and go up to, so they can guide you to how much under asking price you can start from, and also the top end that you can afford to pay if you do end up offering above asking price or above guide price.
How much below asking price should I offer on a house? If you are unsure how much to offer under asking price, follow these steps. Find a property you are interested in first, then speak to a mortgage advisor, and then speak to the agent. In that order!
Best And Final Offer: How Much Over Asking Price
So we’ve spoken how much to offer below asking price and a bit about offering above asking price or guide price, but what happens when the sale nears an agreement and you don’t want to offer any more? Lets look at some figures. If a property is listed at £250,000 asking price, and you have been bidding against another buyer and the property has gone up to £270,000 and you don’t want to pay much more, you can potentially submit a best and final offer. This is exactly what is says, it is the best offer and the final offer that you can make. Now…here is where you need to get tactical. And here is where your mortgage advisor can come in handy.
Remember when I said that your advisor can help you by determining exactly how much you can afford to go up to? Your advisor might tell you that your maximum budget is £280,000 based on your deposit and your mortgage affordability. So you could potentially put a best and final offer in at £280,000. Then it is up to the seller whether or not they want to accept it. Again, each property and each person is different, so there is no specific generic amount over asking price that you should offer.
Should I Offer Asking Price?
It certainly can’t hurt to offer the asking price in most cases. After all, this is the price that they wanted for the property when they originally listed it for sale. It is most likely the value that a professional valuer and estate agent have placed on the property, so in all probability this IS what the property is worth. However as I have already mentioned, in a strong property market with high selling prices and competition, you will more than likely need to offer over asking price to be considered in the bidding for the property. But each property is different, each estate agent is different, and each seller is different.
Speak To A Mortgage Advisor
Well hopefully this guide on asking prices and guide prices has been useful to you potential property buyers. I have said it several times throughout this blog, but the best place to start when making offers on properties is by speaking to a mortgage advisor if you are getting a mortgage or direct with an estate agent if you do not need a mortgage. Mortgage advisors like ourselves at Oportfolio will be able to let you know exactly what you can afford up to, and can give you help and guidance when making offers on properties. Call or email our team today to arrange a fee free initial consultation. We are here to help.
