Guide price vs reserve price: what's the difference?

Every auction lot has two prices, but you only see one of them. Knowing the difference helps you set a sensible budget and avoid wasted time.

The guide price

The guide price is the auctioneer's published indication of where the seller expects the lot to sell, or where bidding might start. It is not a valuation and it is not a promise. Guides can change before auction day, sometimes more than once, so check the latest figure on the auctioneer's own page before you bid.

The reserve price

The reserve is the lowest price the seller has agreed to accept. It is agreed privately between the seller and the auctioneer and is not normally published. If bidding does not reach the reserve, the lot is not sold.

How the two are linked

Advertising rules limit how far apart they can be. Guidance from the Committee of Advertising Practice (CAP), which followed an Advertising Standards Authority (ASA) ruling, says auctioneers must explain, alongside each guide price or clearly linked to it, that:

• for a single-figure guide, the guide is a figure within ten per cent of which the minimum sale price (the reserve) will fall;
• for a range guide, such as £100,000 to £120,000, the minimum sale price will fall within that range;
• guide prices are subject to change.

So a single guide of £100,000 normally points to a reserve within 10% of that figure, in practice no higher than £110,000. A later ASA ruling also accepted that the reserve should not exceed the top of a range guide. Auctioneers who routinely update the guide whenever a higher reserve is set can follow that approach instead.

What this means for you

• Treat the guide as a starting point for research, not a price tag.
• Look at recent sold prices for similar property nearby and decide your own maximum before the auction.
• Remember that fees, tax and any works come on top of the hammer price.
• Lots can sell well above the guide when several bidders want them.

If a guide looks unusually low, ask the auctioneer whether it has changed and whether the seller is taking offers before the auction.