Reserve price at auction: how it is set, how it relates to the price guide, and what changes in Victoria from October 2026

Every auction turns on one number that, until now, almost nobody in the room knew: the reserve price, the lowest figure the seller has told the auctioneer they will accept. Bidding below it is a negotiation in public; the moment bidding reaches it the property is "on the market" and the highest bid wins. Get the reserve right and the auction does its job. Set it badly and the property is passed in, the campaign's momentum is gone and the next buyer knows it.

The rules around the reserve are state law, and they differ more than most sellers realise. New South Wales lets the auctioneer make one vendor bid. South Australia allows three. Queensland forbids agents from publishing a price guide for an auction property at all. And from October 2026 Victoria requires the reserve itself to be published at least seven days before the auction, which ends the secrecy that has defined auctions everywhere else. This guide sets out how a reserve is set, how it relates to the price guide in each state, the vendor-bid and passed-in rules, and how to choose a reserve that sells. Figures are as at September 2026 and the sources are listed at the end.

What a reserve price is, and who sets it

The reserve is the seller's number, not the agent's. The agent advises, using the comparable sales they relied on for the price guide, the level of interest during the campaign and the number of registered bidders, but the seller decides, usually in a conversation the day before or the morning of the auction. It is typically confirmed in writing: in New South Wales the prescribed auction conditions require that "the vendor's reserve price must be given in writing to the auctioneer before the auction commences", and in Queensland the auctioneer must obtain a written notice of the reserve, or a written acknowledgement that the property will sell to the highest bid if no reserve is set, before the auction. In Victoria from October the exchange itself becomes formal: the agent must propose a reserve in writing with reasons, and the seller must confirm a single dollar figure in writing.

Three numbers sit around every auction. The price guide is what the agent tells buyers, and in most states it is regulated. The reserve is what the seller will accept. The hope is what the seller would like. Sellers who confuse the third with the second set reserves that are never reached; agents who let the first drift below the second are underquoting, which is now an offence with six-figure penalties in the two biggest states.

Price guides and reserves: the rules by state

New South Wales

The Property and Stock Agents Act 2002 ties the guide to the agent's own estimate. The agency agreement must contain the agent's estimated selling price, as a single figure or a range no wider than 10% (section 72A), backed by evidence given to the seller and revised in writing if it stops being reasonable. An agent must not advertise a price below that estimate or use "offers over" and similar phrases (section 73), must not say anything to a buyer suggesting a lower price (section 73A), and must keep records of the quotes they give (section 73B). Nothing in the Act requires the reserve to match the estimate, and the reserve is not disclosed. The Property and Stock Agents Amendment (Underquoting and Other Agent Conduct) Act 2026 raised penalties from 29 June 2026, and NSW Fair Trading expects the remaining provisions to start towards the end of 2026: a price or range in every advertisement, a statement of information showing how the estimate was reached, a bar on advertising below the highest bid at a prior auction or a rejected written offer, and underquoting penalties of up to $110,000 or three times the agent's commission, whichever is higher.

Victoria

The Estate Agents Act 1980 already has the tightest link between guide and reserve. The engagement must carry an estimated selling price, single figure or a range within 10% (section 47A), and every campaign needs a statement of information with an indicative selling price, the suburb median and three comparable sales (section 47AF). The indicative price, or the bottom of the range, may not be less than the estimate, a written offer the seller rejected as too low, or any amount the seller has told the agent they will accept (section 47AF(3)). So the moment a Victorian seller names a reserve, the advertised guide cannot sit below it.

From 1 October 2026, for auctions and fixed-date sales held on or after 16 October, the Consumer Legislation Amendment Act 2026 goes further. The agent must request the seller's reserve in writing, stating the agent's proposed reserve and reasons; the seller must confirm a reserve that is "expressed as a single dollar amount" and "not modified by words or symbols" such as "from", "over" or "+" (new section 47AG). The agent must then publish the reserve for at least seven days before the auction, prominently, in every advertisement (section 47AH), and "must not conduct an auction or fixed-date sale" if it has not been published for that period (section 47AI). Each breach carries 240 penalty units, $50,184 at the 2026-27 unit value. A Property Price Statement replaces the statement of information, and the sold price must be added to it within seven days of the unconditional sale and kept public for 18 months. Consumer Affairs Victoria's summary is blunt: "If the reserve price hasn't been published 7 days before the auction or fixed-date sale, it cannot go ahead."

Queensland

Queensland takes the opposite approach: no guide at all. Under the Property Occupations Act 2014, an auctioneer or agent selling residential property by auction "must not disclose to a person other than a person acting for the seller" the reserve, "an amount the auctioneer considers is a price likely to result in a successful or acceptable bid", or "a price guide for the offered property" (sections 214 and 216), with a maximum penalty of 540 penalty units, $93,258 at the 2026-27 unit value of $172.70. The one permitted disclosure is announcing during the auction that the reserve has been met, "the property is on the market". Before helping a seller decide the reserve, the auctioneer must give them a comparative market analysis or a written explanation of how they valued the property (section 213(4)). Buyers in Queensland do their own comparables; the agent cannot do it for them.

South Australia

Under section 24A of the Land and Business (Sale and Conveyancing) Act 1994, any likely-price representation in marketing residential land must be a single figure or a range whose upper limit is no more than 110% of the lower, and must not be below the "prescribed minimum advertising price": the greater of the agent's estimate and the price the vendor has said is acceptable, both as recorded in the sales agency agreement. The penalty is $20,000 or a year's imprisonment, and an agent who breaches it forfeits the commission. As in Victoria, a reserve the seller has committed to in the agency agreement becomes the floor for the guide.

Western Australia

WA has no underquoting statute and no price-guide rule for auctions; Consumer Protection's guidance is that the seller and agent decide the reserve before the auction and that it "is to be kept confidential until a bid has reached or passed it". The REIWA auction conditions and the general law on misleading conduct do the rest.

Vendor bids: what the auctioneer may do for the seller

A vendor bid is a bid the auctioneer makes on the seller's behalf to move bidding towards the reserve. Every state requires it to be announced as such, and most cap it.

• NSW: the auctioneer "may make only 1 vendor bid" at a residential auction and must announce "vendor bid" immediately before making it; the number of vendor bids allowed must be announced before bidding starts, and bidders must be registered in the Bidders Record and display their number (Property and Stock Agents Regulation 2022, regulation 18). If the property is passed in on a vendor bid, any later marketing that quotes the figure must say it was a vendor bid (Act, section 76A). Co-owners and executors buying out an interest are the exception.
• Victoria: the auction rules must state whether vendor bids are permitted; only the auctioneer may make them, must announce before bidding the words they will use, and must say "vendor bid" or the equivalent each time (Sale of Land (Public Auctions) Regulations 2024, regulation 7 and Schedule 1). There is no statutory cap on the number. On request the auctioneer must point out who made a bid (regulation 8).
• Queensland: a seller or seller's agent may bid only if the auctioneer discloses to the other bidders that the bid is the seller's, and the auctioneer must not accept a seller's bid above the reserve (Property Occupations Regulation 2014, section 24). Bidders must be registered with photo identification (section 23).
• South Australia: the auctioneer may make no more than three vendor bids at a residential auction, each below the reserve, each announced as a "vendor bid", and only if the conditions permit it and the auctioneer announced that before bidding (section 24O). Any other bid by or for the vendor is dummy bidding, a $20,000 offence (section 24N), and a passed-in figure that was a vendor bid must be described as one in later marketing (section 24P).
• Western Australia: vendor bids are allowed if the right is in the conditions and announced; Consumer Protection notes the REIWA general conditions provide for up to ten.

For a buyer the rule of thumb is the same everywhere: a vendor bid tells you the reserve has not been reached. For a seller, it is a tool for starting bidding, not for winning it; an auction that ends on a vendor bid is a passed-in property with a published number attached.

"On the market", "passed in" and what happens next

When bidding reaches the reserve the auctioneer announces the property is on the market. From that point the auctioneer can no longer withdraw it and the highest bid at the fall of the hammer buys it, unconditionally, with the contract signed on the spot. If bidding stalls short of the reserve the auctioneer usually pauses to consult the seller, who can lower the reserve to meet the bidding or hold. If they hold, the property is passed in.

Passing in is not a failure of the contract, it is the end of the auction. Victoria's auction rules write down what the other states do by convention: "If a reserve price has been set for the property and the property is passed in below that reserve price, the vendor will first negotiate with the highest bidder" (Schedule 1, rule 8). Queensland's regulations allow the auctioneer to reveal a bidder's identity to the seller for exactly that purpose. The negotiation typically happens on the spot, at a price between the last bid and the reserve, and a contract signed that afternoon is still an auction-day contract with no cooling-off period in NSW, Victoria, Queensland and South Australia, so buyers should walk into it prepared. Our auction guide covers the day itself and the negotiation guide covers the conversation afterwards.

Setting a reserve that sells

The agent's estimate was set at listing from comparable sales. The reserve is set at the end of the campaign with better information: how many groups inspected, who requested contracts and building reports, what buyers said about price, and how many have registered to bid. A campaign that produced two registered bidders and a room full of neighbours is a different auction from one with six. The practical rules:

• Decide the walk-away price first. The reserve is the figure below which you would rather keep the property than sell it today. It is not the price you hope for; the auction is designed to find that.
• Keep it inside the guide. Where the law ties the guide to what you have told the agent you will accept, as in Victoria and South Australia, a reserve above the top of the guide is not lawful to run with; the guide must move. Everywhere, a reserve well above the guide produces a room that stops bidding at the number they were told.
• Use the registered-bidder count. One genuine bidder means the reserve is effectively an asking price; two or more means competition can carry the price past it. Agents will tell you the count; ask for it before you set the number.
• Decide in advance what you will do if it stalls. Whether you would lower the reserve mid-auction, and by how much, is a calmer decision on Friday than at 11:40 on Saturday with the auctioneer at your elbow.
• In Victoria from October, price it like a private treaty. Once the reserve is public for a week, the auction starts at a known floor. Sellers who set a high reserve to "see what happens" will see a smaller crowd; the number has to be one buyers will turn up to compete above.

Sellers weighing auction against a private campaign should read auction versus private treaty; the current clearance picture, which shows how often reserves are being met in each capital, is in our clearance rates report. The auctioneer's fee, typically $400 to $1,200, sits in the cost of selling.

If you are the buyer: how to read the guide

1. NSW: the guide cannot be below the agent's written estimate, and the estimate must be a single figure or a 10% range. Ask the agent for the estimate directly; they must keep a record of what they tell you. Assume the reserve is at or above the top of the guide until the property is announced on the market.
2. Victoria: read the statement of information: the indicative price cannot be below the estimate, a rejected offer or anything the seller has said they will accept, and from 16 October the reserve is on the advertisement. If the agent's guide moves up during a campaign, the seller has usually named a reserve.
3. Queensland: there is no guide and the agent cannot tell you one. Pull the recent sales yourself and treat the auctioneer's "on the market" call as the only price signal you will get.
4. South Australia: the advertised range is capped at 10% wide and floored at the greater of the estimate and the vendor's stated acceptable price; the vendor bid cap of three tells you how much of the early bidding may be the auctioneer's.
5. Everywhere: register to bid, get finance unconditional and the building and pest report done before the day, because a winning bid and a post-passed-in contract are both unconditional. Our questions to ask a real estate agent include the ones about price.

The mistakes that pass properties in

• Setting the reserve from the hope, not the evidence. The campaign told you what buyers think; the reserve should listen.
• A guide that never moved. If buyer feedback pushed the agent's estimate up, the guide and, in Victoria and SA, the reserve floor should have moved with it; if feedback pushed it down and the guide stayed, the room arrives expecting a bargain.
• Leaning on vendor bids. One in NSW, three in SA, and a passed-in figure that was a vendor bid must be labelled as one afterwards.
• No plan for the pause. The mid-auction consult is where reserves are lowered by tens of thousands in thirty seconds. Decide the range beforehand.
• Refusing the highest bidder after a pass-in. They are, by definition, the person who wanted it most today. The negotiation with them is the campaign's last and usually best chance.

Where this fits

The reserve is the last decision in an auction campaign and the one the rest was built to inform. Our guide to how to sell a house in Australia covers the campaign end to end, how to choose a selling agent covers picking the person who will advise you on the number, and the state contract guides, starting with NSW and the Victorian Section 32, cover the paperwork that must be ready before the first bidder registers. If you want a written appraisal from an agent who auctions in your suburb before you decide the method, request a free appraisal.

Sources

• Property and Stock Agents Act 2002 (NSW), sections 66 to 68, 72A, 73, 73A, 73B, 76A and 77, current version: legislation.nsw.gov.au; Property and Stock Agents Regulation 2022 (NSW), regulation 18 (conditions of sale by auction, quoted): legislation.nsw.gov.au; NSW Fair Trading, Changes to property and stock agents laws (commencement of the 2026 amendments).
• Estate Agents Act 1980 (Vic), sections 47A and 47AF, authorised version 135 (9 September 2026); Consumer Legislation Amendment Act 2026 (Vic), No. 36 of 2026, Part 5 (new sections 47AG to 47AJ, quoted) and new section 110 (transitional): legislation.vic.gov.au; Sale of Land (Public Auctions) Regulations 2024 (Vic), regulations 7 and 8 and Schedule 1 (rule 8 quoted); Consumer Affairs Victoria, New changes to property sales and underquoting laws (updated 15 September 2026, quoted). Victorian penalty unit $209.10 for 2026-27.
• Property Occupations Act 2014 (Qld), sections 213 to 216 (quoted), current as at 1 August 2025, and Property Occupations Regulation 2014 (Qld), sections 23 to 25: legislation.qld.gov.au. Queensland penalty unit $172.70 from 1 July 2026.
• Land and Business (Sale and Conveyancing) Act 1994 (SA), sections 24A, 24I, 24K, 24N, 24O and 24P: legislation.sa.gov.au.
• Consumer Protection WA, Selling a property by auction and Buying property at an auction (reserve confidentiality, quoted; REIWA vendor-bid conditions).
• Passed-in negotiation practice outside Victoria, the mid-auction consult and the auctioneer fee range are described as conventions, not rules.