Price Guides Explained

The tricky world of deciphering price guides- explained by an ex real estate agent

In the last few year agents have got rather creative in the way they market and advertise property. With ever changing legislation and ruling consumers can become frustrated in trying to keep up. Lets start with the basics 

If you’ve been hiding under a rock you may remember the glory days of offers over. This was a crazy time in real estate a very competitive housing boom and properties were selling way over what was quoted. For example a property may have had a price guide of offers over $900,000 and could have sold for $1.2million at auction. A lot of buyers missed out and this ultimately left a bad taste in their mouth. In 2018 new legislation was introduced and offers over is now banned in NSW.

Fast forward to today and here are the most common pricing strategies:

Auction 

This is a no displayed price strategy and the agent may or may not give you (they have the option) any price guide at all. If they do they have 2 options either a single price ($700,000 or a likely selling price range thats within 10% ($700,00 - $770,000)

Auction unless sold prior

this is very similar to above however the “unless sold prior is an invitation to put an offer before auction thats if its in your best interest of Course, This strategy is used to create urgency and invite offers most of the time the agent has no intention of taking the property to auction.

A price range

This is probably the easiest for people to understand its very simple the price will most likely end up between X & X figure. The legal maximum this figure can be is 10% apart so for a $550,000 property the agent could say the likely selling price is between $500,000 - $550,000.

Single Price Guide (eg: price guide $600,000)

This is one causes the most confusion in the market and frustrations can boil over on auction day and here are the reasons why. Dependant on the agent a single price guide can be interpreted three different ways. If the agent quotes say $700,000 this could mean that the likely selling price should be around or either side of $700,000.

However the agent can legally quote the bottom end of their appraisal range to buyers for example if the owners of a property wanted say $770,000 for their home and the agent has appraised it at $700,000 - $770,000. The agent is legally allowed to quote $700,000 as the price and an uneducated buyer can interpret this as an asking price of $700,000 or worse what the owners will accept.

Price guides can be very tricky to navigate and even harder in a rising or falling market. In the end it doesn’t matter what the agent quotes its what the owner will accept and what the buyers are willing to pay. As a buyers we are inspecting multiple properties everyday so it pays to get expert advice on what properties are likely to sell for.

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