Bid Price

The Bid Price can be defined as the maximum price for which a potential buyer is willing to pay for a specific security. It is often lower than the asking price or the price for which the seller has the property listed. Negotiations are frequently undertaken in order for the two parties to be satisfied with the final settled-upon price. Consulting with an agent can assist a potential investor with proposing an appropriate Bid Price. Occasions may arise in which the Bid Price is equivalent to or higher than the ask price if there is high demand for the specified asset. In cases that involve multiple parties interested in one particular property, a bidding war can ensue. If a market has high demand but few properties available, it is referred to as a ‘seller’s market’ and usually equates to a higher Bid Price; however, if a market has many properties available and a lower demand, it is referred to as a ‘buyer’s market’ and usually equates to a lower Bid Price. Typically, the lower the Bid Price, the higher the potential return on investment (the difference between the gain and the cost of the investment, divided by the cost of the investment). The Bid Price is often the max price a buyer is willing to pay for a specified quantity of shares.