What does 'Asking Price' mean when buying a property?
Find out what Asking Price means when you are buying a property. 'What does Asking Price mean?' plus over 150 other property related terms and jargon in plain English
There are five different prices used in property transactions but they're not all used in every transaction.
- Asking Price - How much the vendor wants for the property, how much it is advertised at
- Agreed Price - How much the vendor has agreed to sell the property for - which can be below, at or above the Asking Price.
- Reserve Price - For properties sold at auction this is the price below which the vendor will not sell.
- Guide Price - For properties sold at auction this is the price the auctioneer expects the property to sell for although in reality they set these very low to attract larger audiences.
- Contract Price - The actual price the property is to be sold/bought for in the contract of sale. This can differ from the Agreed Price for numerous reasons such as the discovery of a problem with the roof which will require expensive repair. The seller and you negotiate a new lower price which becomes the Contract Price.
Asking Price is a term used for properties on the open market either being sold privately or by an estate agent. It is not a term used by Auctioneers.
As a buyer Asking Prices are a guide that you can only make sense of when you understand the local market.
This is because you may be looking at a time when "most properties sell for the asking price" or at a time when vendors are "generally accepting 10% below the asking price". In the latter circumstances the estate agent will have briefed the seller on market conditions and suggested something like "So put your property on the market for 10% more so you have room to negotiate a discount".
Estate agents may or may not let you in on this. Remember they act for the seller, not you the buyer. You need to lever such gems out of them.
You won't find out by looking at properties which are under offer because these only state their asking price, not the Agreed Price.
Reality is in the chatter of half a dozen estate agents, most of which will tell you far too much if they spend to much time with you!
There are loads of tips and tricks on how to get to know a local market and understand its Asking Prices in How to Really Buy a Property.