What is a price guide in New Zealand real estate listings?

What Is a Price Guide and How Is It Different From an Asking Price?
Price guides and asking prices work differently in New Zealand real estate. Understanding the distinction helps both buyers and sellers make better decisions.

What an asking price is
An asking price is a specific dollar amount at which the vendor is prepared to consider selling. It is the number on the listing: $749,000 or $1,195,000. An asking price is typically used in price-by-negotiation or deadline-sale campaigns and represents the vendor’s stated expectation. Buyers typically negotiate from the asking price, or occasionally meet it or exceed it in competitive situations.

What a price guide is
A price guide is an indicative range or approximate figure that signals to buyers roughly what level the vendor is expecting, without committing to a specific asking price. Price guides are most commonly used in auction campaigns: ‘price guide: $700,000-plus’ or ‘expected to sell between $720,000 and $760,000.’ They give buyers enough information to determine whether a property is within their budget and worth pursuing further.

The legal requirements on price guides in NZ
New Zealand’s real estate regulations require that any price indication given by an agent must be reasonably related to what the vendor will actually accept. Agents cannot provide a low price guide to attract buyers and then accept significantly higher offers at auction without acknowledgment that the guide was unrealistic. The Real Estate Authority monitors misleading price indication practices.

Price guides and auction strategy
In an auction campaign, the price guide serves to attract buyers into the process without the vendor committing to a price. The vendor sets a confidential reserve (the minimum they will accept). If auction bidding exceeds the reserve, the property sells under the hammer. If bidding reaches the guide range but not the reserve, the property passes in and is negotiated afterwards. The price guide should be consistent with the reserve. 
A misleading guide that is well below the reserve undermines buyer trust.
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For buyers reading price guides
When you see a price guide, budget above it. Properties in popular categories frequently sell above their price guides in competitive auction conditions. Budget to the top of the guide range and add 5 to 10 percent for competitive auction contingency.
If the property sells above what you can afford, that’s the right outcome.
It means another buyer was prepared to pay more, and your discipline protects you.

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Paul Sumich is a Whangarei-based real estate professional with local Northland expertise. Find more at paulsumich.co.nz/blog