A guaranteed purchase is a system where "the property is listed through brokerage for a set period, and if it doesn't sell within that period, the real estate company buys it at a price agreed in advance." Being able to fix your sale timeline ahead of time is its single biggest value.
- A guaranteed purchase is a hybrid system combining a brokered listing with a direct purchase.
- The guaranteed price and guarantee period are agreed in advance.
- It makes it easier to plan the finances for a move, with no risk of being left unsold.
- The guaranteed price is generally around 70-80% of the market rate.
- The conditions that trigger the guarantee, and whether you can cancel partway through, need to be confirmed beforehand.
What Is a Guaranteed Purchase?
A guaranteed purchase is a system in which the property is listed through ordinary brokerage for a set period, and if a sale isn't reached within that period, the real estate company buys it at a price agreed on in advance. Because it aims for a market-price sale through brokerage while also providing a fallback in case it doesn't sell in time, being able to fix your sale timeline is its single biggest value. It's a system that often comes up as an option when the settlement timing for your next home is already fixed, such as with a move to a new residence.
How It Works
A guaranteed purchase is a hybrid system that combines an ordinary brokered listing with a direct purchase by the real estate company. At the outset of the agreement, you set the guaranteed price (the price at which the company buys it if it doesn't sell) and the guarantee period (the period during which it's listed through brokerage). If a buyer is found through brokerage within the period, the sale goes through at market price; if not, the purchase at the guaranteed price is carried out. Because the guaranteed price and guarantee period vary from one real estate company to another, it's worth comparing terms from more than one company beforehand.
Benefits
The benefit of a guaranteed purchase is that it makes it easier to plan the finances for a move. If the settlement deadline for a new home is already fixed, being able to see when the sale will be completed is a major source of reassurance. It also removes the risk of being left unsold, since a purchase at the guaranteed price is assured if nothing sells within the period — meaning you can know the floor on your eventual proceeds ahead of time.
Drawbacks
On the other hand, the guaranteed price is generally around 70-80% of the market rate as a rule of thumb, so your proceeds may end up lower than with an ordinary brokered sale alone. It's also worth checking whether having a guaranteed price in place weakens the motivation to sell at a higher price during the brokerage period — confirm the asking price and the actual sales activity being carried out. It's also worth checking in advance what kind of advertising activity will take place during the brokerage period.
Who It Suits
A guaranteed purchase suits situations where the settlement deadline for your next home is already fixed as part of a move, or where you want to lock in your relocation schedule due to a job transfer, enrollment, or similar circumstances. For anyone who wants certainty about the timing of their sale, it's a system worth considering.
What to Check Before Using It
Before using a guaranteed purchase, check what basis the guaranteed price is calculated on, what conditions trigger the guarantee, and whether you can cancel the contract partway through. It's also worth comparing the expected proceeds and timeline against an ordinary brokered sale alone, or against an immediate direct purchase.
Frequently Asked Questions
About how much is the guaranteed purchase price?
Around 70-80% of the market rate is the general rule of thumb. It's a two-stage arrangement: if it sells through brokerage first, you get the market price; if not, you get the guaranteed price.
What's the difference between a guaranteed purchase and an immediate direct purchase?
An immediate direct purchase means selling straight to the real estate company right away. A guaranteed purchase first lists the property on the open market through brokerage, and the purchase is triggered only if it doesn't sell within the set period.
Does using a guaranteed purchase mean I'm certain to sell?
If the guarantee conditions are met, the purchase at the agreed price is carried out once the period expires. However, the conditions that trigger it and the requirements for eligible properties need to be confirmed in the contract beforehand.
Summary
A guaranteed purchase is a system that lets you aim for a brokered sale while also providing a fallback if it doesn't sell within the deadline, suiting anyone who wants to fix their sale timeline. It's worth checking the level of the guaranteed price and the conditions that trigger it, and comparing it against an ordinary brokered sale or an immediate direct purchase before deciding.