In a changing market, buyers need to understand what the guide is really telling them
Recently I bid for clients at an auction in Strathfield. Before auction day, our analysis of the comparable sales put the property’s value at between $8 million and $8.5 million. On the day, we secured it for under $8 million.
The price guide never came into it. What mattered was knowing, with evidence, what the property was worth. That gave my clients a clear limit and gave me the confidence to bid decisively rather than react to the room.
That is the question every buyer should be asking right now, and it is one that no amount of market commentary can answer:
What is this particular property actually worth?
The selling agent’s price guide can make that question harder, not because the guide is wrong, but because of what it does to buyers’ thinking. It quietly becomes the reference point that every offer, every bid and every sense of “did we do well?” is measured against.
How the guide became the benchmark
During Sydney’s stronger periods, buyers became used to seeing properties sell well above their advertised guides. That fuelled the long-running debate about underquoting. It also had a quieter effect on how buyers thought about value.
Because the guide was so consistently exceeded, many buyers came to treat it as the floor: a baseline from which the “real” price would be built. Buyers began measuring outcomes against the guide rather than against the property’s actual value. Paying close to the guide felt like a win, and paying well above it felt like the price of admission.
But the price guide was never designed to play that role. It is a marketing tool. Its job is to position the property and attract the right pool of buyers. It is not an independent valuation, and it is not a reliable prediction of what the property will sell for.
In a softer market, the trap flips
Today, many buyers are facing a very different dynamic. There are fewer competing buyers, properties are taking longer to sell and some vendors are more willing to negotiate. A buyer who once had to compete aggressively just to stay in the conversation may now find themselves in a genuine negotiation.
In a strong market, the mistake was assuming the guide was a reliable indication of value because properties kept selling above it. In a softer market, the temptation is the opposite: if you can buy below the guide, you must have found a bargain.
Neither conclusion necessarily follows.
A discount is not a bargain
Suppose a property is advertised at $2.2 million and, after negotiation, the vendor agrees to $2.05 million. It is tempting to conclude you have bought well, because you have saved $150,000 against the guide.
But was the property ever worth $2.2 million? Or even $2.05 million? If the evidence suggests it is only worth around $1.9 million, you have negotiated a discount, but you have not negotiated value.
Now reverse it. A property is guided at $2.2 million, but genuinely comparable sales tell you it is worth around $2.4 million. You pay $2.3 million. You have paid more than the guide, yet you have bought better than the buyer who took $150,000 off theirs.
This is why I am always wary when buyers tell me they bought “under the guide” as though that proves they bought well. It is a useful negotiating outcome, but it says very little about the property’s underlying value.
The important number is not the discount you achieved. It is the relationship between what you paid and what the property is actually worth.
Value comes from the comparable sales
Establishing value starts with what comparable properties have recently sold for, and there is a big difference between finding three listings that look vaguely similar and properly analysing comparable sales.
Two three-bedroom houses on 400 square metres are not necessarily comparable. One may sit on a quiet, sought-after street with good orientation, privacy and a functional floorplan. The other may be on a busy road, with an awkward layout and a need for substantial work. Same bedrooms, same land size, but very different values.
You need to understand not just what other properties sold for, but why, and how they compare with the property in front of you. I covered how to test and adjust comparable sales in How to Spot a Bargain.
Know your number before you negotiate
The same discipline that worked in Strathfield applies to private negotiations. If you have done your homework and concluded a property is worth about $2.1 million, you have a genuine basis for your offer, and you know where you are prepared to move and where you should walk away.
Without that analysis, negotiation quickly becomes a conversation about numbers. The vendor wants $2.2 million. Another buyer is at $2.15 million. Can you find another $25,000? Before long, the question is whether you can afford another $25,000 rather than whether the property is worth it.
That is how buyers end up negotiating against themselves.
Do not let another buyer set your valuation either. If someone is prepared to pay $50,000 more than you believe the property is worth, that does not make your assessment wrong. It simply means they value it more highly than you do. There will always be another property.
A softer market does not discount everything
There is an equally important warning for buyers who think the current market hands them enormous negotiating power. Some properties will still attract strong competition because they are scarce, well positioned or simply desirable. Others will struggle because of their condition, location or limitations.
“The market is down” and “buyers have the upper hand” may shape the negotiating environment, but they do not tell you what the property in front of you is worth. The job is to separate the two.
Market value vs what it is worth to you
Use the guide for what it is designed to do: Understand how a property is positioned, whether it may be within your range and whether it is worth inspecting. Once you are serious, put it to one side and ask whether the evidence supports the price you are contemplating.
There is also a difference between market value and what a property is worth to you. Perhaps it is in the street you have been trying to buy in for years, or it gives you a lifestyle or school access that is hard to replicate. Those things can legitimately justify paying more, provided you are consciously choosing to pay a premium for something that matters to you, rather than simply accepting the number on the marketing material.
Where the conversation starts
The Sydney market will keep moving through cycles, but the discipline of buying well does not change. Buying above the guide does not mean you overpaid. Buying below it does not mean you secured a bargain.
The real question is not “How far below the guide can I buy it?” It is “What is this property actually worth and what is it worth to me?”
The price guide is where the conversation starts. It should never be where your valuation ends.
If you would like an independent view on what a property is worth before you make an offer or bid at auction, contact Buyer’s Domain.
