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
Asking Price
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.
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How to Really Buy a Property
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Chapter 2:
The Media and Property Prices
"... are many sources of data to tell journalists what is happening to the housing market. Here are just a few:
Land registry;
asking prices (as reported by agents);
New applicants registering (as reported by agents);
Mortgage application numbers (as reported by lenders);
Average incomes..."
Chapter 5:
Is the Property Market Overvalued?
"... data can be misleading;
Why applying logic doesn't work;
Why calculating price per square foot doesn't work;
The true story of a buyer who paid twice the asking price.
- Modelling the Property Market -
First time buyers and amateur investors tend to have a habit of modelling..."
"... and, especially if an entire family is on the move, the potential loss is worth it to avoid the hassle of a double move.
True Story - Paying Double the asking price
A house ideal for a well-to-do family had come onto the market in Kensington. Prices were generally stagnant and the press..."
"... house ideal for a well-to-do family had come onto the market in Kensington. Prices were generally stagnant and the press was full of stories about an imminent crash but this did not stop three parties all offering on the property at the asking price of £1.1 million. The vendor decided to ask for sealed bids. Each of the three parties would put forward their best offer and the highest bid would get the..."
"... In the event the highest bid was £2.1 million, nearly twice the asking price. When the buyer was asked why he had made such an offer he replied, "I want this house as a place to bring up my family over the next twenty years. By then I expect it will be worth about £2.1 million".
He..."
Chapter 7:
Why Buy in a Falling Market?
"... at some point they will feel values have dropped, values may drop further, but they will eventually rise. They also know that they will be in a good bargaining position to have an offer below the asking price accepted. Many see property as a ten year investment so even a 10% loss in the short term will not make a major difference to their..."
Chapter 8:
Buying to Let / For an Investment
"... is essential, when buying through a property investment company, to double check all their figures to your own satisfaction and this is something that can be done, in most cases, over the internet. First look at property prices and rentals in the immediate area. Next call local agents to see what actual values are being achieved. For example, is it the norm at the point that you are buying for property to be selling at 10% below the asking price and for tenants to be negotiating 5% off the rental values. These are the real market..."
Chapter 10:
Working with Estate Agents
"... Story - A Property on the Market for 14 MonthsA house had been on the market for fourteen months in Northchurch Terrace, N1. It was placed on the market at £650,000 but this proved too expensive at the beginning. The vendor was not interested in reducing the asking price as she had no mortgage on the property and no urgent need for the..."
"... to bid higher.
One party did think the price was reasonable and offered the asking price. The other two parties believed they were being led up the garden path by the agent and knowing how long the property had been on the market assumed they could get a low offer agreed.
They only..."
"... on the market assumed they could get a low offer agreed.
They only realised the asking price offer from the third party was successful when they were told it had been agreed and the vendor was not taking their interest any further.
- Summary -
There are good and bad estate agents out..."
Chapter 13:
Your Own Homework
"... Property for? -
The last time a property was sold (if this happened within the last decade), and the value it sold for, are listed on the Right Move website at https://www.rightmove.co.uk/house-prices.html. In considering the current asking price you should take into account:
How long ago..."
Chapter 15:
How to Really Make an Offer on a Property
"... when it is of little financial benefit to them;
What to offer and when;
How the time of year will affect your offer;
When to offer below, at or above the asking price;
How to handle bidding wars and sealed bids;
Why defining your offer can save you money;
What should be in your offer..."
"... put it another way if the Estate Agent is being paid 2% of the sale fee and the negotiator is getting 10% of that then on a £240,000 flat the negotiator is going to be paid £480. If you have offered £235,000 and the negotiator is trying to get you to the asking price he is not trying to get £10 (the commission he would earn on the extra £5,000), he is trying to make sure you do not get..."
"... buyers.
If a vendor is desperate they will still achieve the asking price (or more) if the market is booming. A property may also have been on the market for over a year but if prices have been rising the true value of the property may have been realised just as you start searching.
..."
"... your own desire for the property.
The graph below represents the level of offers versus asking price in an annual market cycle (see Understanding the Property Market) but you should take into account any factors that may have caused the cycle to vary.
Offers agreed above or below asking..."
"... should take into account any factors that may have caused the cycle to vary.
Offers agreed above or below asking price vary throughout the year in an annual property market that has not been affected by other factors
- Choosing your Offer Level -
The following outline the various ways to..."
"... affected by other factors
- Choosing your Offer Level -
The following outline the various ways to offer on a property.
- Paying Below the asking price -
If you feel that there is a good choice on the market and you could as easily buy the property you are about to offer on as..."
"... for maneuver
In any normal market conditions this should never be more than 10% below the asking price. To go further may mean the vendor will want nothing further to do with you as they feel insulted. You may increase your offer later but he will refuse it on principle.
A very low offer..."
"... the negotiator will then be reluctant to show you further properties and move you to the bottom of his mental list of priorities.
- Paying the asking price -
In a fast moving market seriously consider this. It is an extremely strong way of saying to the vendor, "I like your property, I am a..."
"... the net and thought, what an undervalued bargain!
A second line in avoiding this is to make your first offer just below the asking price before coming up. Exactly how to do this is explained in the section on pitching your offer below.
In exchange for offering the asking price you should..."
"... In exchange for offering the asking price you should expect, and request, that the vendor withdraws his property from the market although they may not be prepared to do this until you have instructed a solicitor and paid for a survey (i.e. spent some money yourself to show you are serious).
..."
"... do this until you have instructed a solicitor and paid for a survey (i.e. spent some money yourself to show you are serious).
- Paying More Than the asking price -
No one ever starts by making an offer above the asking price but very often there may be more than one offer at the asking..."
"... one ever starts by making an offer above the asking price but very often there may be more than one offer at the asking price. In this instance a good agent will take the matter to sealed bids whereas a bad agent will start a bidding war. If it sounds like you are heading for a bidding war try and persuade the agent or the vendor to use sealed..."
"... two bedroom mansion block flat had been on the market for five months. The vendor had verbally accepted an offer £5,000 below the asking price of £137,500. Another party then offered to pay the asking price. The original buyer was offered the chance to match this which they did and so the vendor, faced with two very similar offers decided to go to sealed..."
"... original buyers had already, to some extent, damaged their standing in the vendors eyes by suddenly coming up with an extra £5,000 but they then compounded this by saying their sealed bid would be £137,500, the same as the asking price and their current offer. The other party offered £341,700 and their offer was accepted. The original buyers then came back and said they would be prepared to offer £343,000. It was too..."
"... could be further from the truth and so pitching an offer in a certain way should ensure your expectations are actually met. Whether or not you are ready to pay the asking price or just make an offer there is a way that is far more likely to work than simply bumbling in with your best and final..."
Chapter 18:
The Balance of Power
"... view the property.
Simon was a first time buyer and knew his strong bargaining position. Over a four day period he negotiated through the agent and eventually achieved an agreement at over 10% below the asking price – exceptional for the market place at the time.
The chain moved..."
Chapter 19:
Time Costs Deals
"... in the meantime, was close to exchange on his purchase when the vendor pulled out after loosing his job. David called the agent to talk about new properties he could buy and asked after Seymour Street. He was shocked to find that after nearly three months, and in the middle of a busy Spring market, it had not exchanged and immediately offered to pay the asking..."
Chapter 20:
What a Property Survey Really Means
"... the absence of sold signs he calls any local agents and asks them what they have sold recently in the area and tries to match it up. There is nothing more to it than that. If you want to try it for yourself find a sold sign, call up the agent and say, "Hi, this is Fred Smith from Island Surveyors, I see you have sold something in the High Street, can I ask what it was and how much it sold for?". You'll get the complete run down including the actual price it sold for, not its asking price. Note that Estate Agents, by law, are not allowed to tell you (a buyer) the actual price a property has sold for until it exchanges as this is confidential information. Agents are however, always trying to please surveyors because they don't want properties down valued, so if you pose as a surveyor you will find out..."
"... market was moving up.
The vendor eventually became frustrated and withdrew the contract from Diane's solicitor. Five weeks later he sold the property at the asking price and the survey from the new buyer made no mention of the tree or any movement in the property.
Diane ended up buying a..."
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