Should Auction Reserve Price be Disclosed in Melbourne?
- Rayson L.
- 1 day ago
- 12 min read
Updated: 39 minutes ago
If you’ve ever stood on a nature strip at a Melbourne auction wondering “Why won’t they just tell us the reserve? This is a bloody joke.” You’re not alone.
From a buyer’s point of view, not disclosing the reserve price feels like a complete waste of time.
From a seller’s and sales agent’s point of view, it’s the whole point of running an auction.
From a buyer's agent's point of view, it doesn't really matter much. Their experience would have told them what the property is worth and the price range it will likely sell for. Experience in the market is important here.
In this article, we’ll discuss:
What the reserve price actually is
Why it’s rarely disclosed before or during an auction
The pros and cons of disclosing vs not disclosing the reserve
How this affects buyers and sellers in Melbourne and across Australia
Practical tips to protect yourself as a buyer
What Is a Reserve Price at a Property Auction?
The reserve price is the minimum price the vendor is willing to accept at auction.
If bidding reaches or exceeds the reserve, the property is usually “on the market” and will usually be sold to the highest bidder.
If bidding doesn’t reach the reserve, the property is typically “passed in” and negotiations happen afterwards with the highest bidder and other interested parties. Sometimes, the next higher bidder might also be asked to prepare for negotiations, in case the higher bidder could not reach an agreeable price.
In Melbourne, Victoria and most of Australia, the reserve:
Is set by the vendor, usually in consultation with the sales agent
Is not required to be disclosed to buyers before or during the auction
Can be adjusted on the day (and during the auction), depending on buyer interest and bidding strength
How Do You Know the Auction has Exceeded the Reserve Price?
You’ll often hear the auctioneer say:
“Ladies and gentlemen, we are now on the market.”
That’s your only official clue that bidding has reached or surpassed the reserve price.
Why the Reserve Price Is Usually Kept Secret
So, if the seller will not sell below a certain price, what’s the logic behind keeping the reserve a secret? It is more tactical strategy, rather than a legal requirement.
1. Uncertainty Creates Competitive Tension
If reserve price is disclosed, every buyer knew the reserve was exactly $1,400,000:
Buyers capped at $1.3m wouldn’t even bother registering or turning up.
Buyers willing to pay up to $1.45m might only bid just above $1.4m and hope no one else pushes them.
By not disclosing the reserve, the agent is trying to:
Keep more bidders in the game, “just in case”
Get buyers emotionally engaged in the auction process
Encourage stretched bidding once people are “in too deep” to easily walk away
Uncertainty creates hope. Hope fuels a anticipation. Anticipation means extra bids. Extra bids fuel the final sale price.
From a vendor’s perspective, that uncertainty is a feature, not a bug.
2. Flexibility to Move the Goalposts
If the vendor publicly said:
“Our reserve is $1.4m.”
They’ve effectively set their price.
But in real life, campaigns are messy:
Sometimes buyer interest is stronger than expected – plenty of bidders, multiple contract requests, people throwing around big numbers.
Sometimes interest is softer – budget limitations, weather factor, shoes-off factor, nervous buyers, negative building reports, or just a quieter market.
By keeping the reserve secret, the vendor and sales agent can flexibly to maximise the sale:
Increase the reserve on a hot campaign
Reduce the reserve on a weak campaign
Decide on the day whether to put the property “on the market” or pass it in and negotiate
This flexibility can easily be worth tens of thousands of dollars to a vendor.
3. Undisclosed Reserve Price Favours the Seller
In almost every auction campaign, the vendor and sales agent know far more than any buyer:
All private offers received
Buyer numbers at open homes
How many contracts have gone out
The vendor’s true “walk-away” number
Other offers that may be conditional or off-market
Most buyers only know:
Their own budget
The quoted range
A handful of comparable sales (if they’ve even identified them correctly. Most don't.)
By not disclosing the reserve, the seller preserves that information advantage.
Once you, as a buyer, know the reserve:
You can guess their expectations and read their intent
You can make more calculated decisions (or walk away entirely)
You have more leverage when negotiating after a pass-in
Sellers and sales agents are not going to make it easier for you. They’re trying to keep the upper hand.
4. More Hopeful Buyers Means Better Outcomes for the Vendor
In a typical auction campaign, a huge portion of buyers walk into auctions thinking:
“We’ll see how it goes. If it looks like it might be in our range, we’ll bid.”
If the reserve was clearly above their limit, those “maybes” would stay home.
When the reserve is hidden:
More people register to bid
More bidders, at least in the early stages
The auction has a larger audience, which:
Encourages under-bidders to stretch
Creates social proof that the property is “worth it”
Intimidates more cautious buyers
Even buyers who never stood a real chance at buying still serve a purpose. They push up the price for the vendor.
Pros and Cons of Not Disclosing the Reserve Price
Let’s look at it clearly from both sides.
For Sellers: Benefits of NOT disclosing the reserve:
✅ Maximises competitive tension – buyers don’t know where the finish line is
✅ Keeps more buyers in the race – even those whose budgets are borderline
✅ Maintains flexibility – vendor can adjust the reserve based on interest
✅ Preserves information advantage – harder for buyers to game the process
✅ Often leads to higher final sale prices, especially in strong markets
For Sellers: Cons of NOT disclosing the reserve:
⚠️ Some serious buyers may refuse to play the game and they do avoid auctions altogether
⚠️ Almost certainly create mistrust, especially if the quote range is obviously low compared to where the property actually sells
⚠️ Risk of a messy post-auction negotiation if buyers feel they were misled or “used” as price fodder
For Buyers: Benefits of NOT Knowing the Reserve Price
Honestly, for buyers, there are very few genuine benefits here, but there are a few:
✅ You might occasionally get a nervous vendor who lowers their reserve on the day if bidding is weak
✅ If you’re the only serious bidder and the property passes in to you, you can sometimes flip the table and negotiate hard after the auction. ie..
✅ You can sometimes pick up a good deal at auctions, if the sales agents had not run it properly
For Buyers: Cons of NOT Knowing the Reserve Price
❌ Wasted time and emotional energy turning up to auctions that were never realistically in your budget
❌ Harder to plan your max bid strategy when you don’t know whether you’re close or miles away
❌ Easy to overpay in the heat of the moment, especially if you’ve already mentally moved into the house
❌ Feels intimidated. The feeling that the whole process is stacked against buyers, which, frankly, it is. Fear forces your mind to work in survival mode, to want to win the auction.
Pros and Cons of Disclosing the Reserve Price
A few sales agents, usually in softer markets or with highly transparent agents, do disclose the reserve or at least a very tight “it will definitely sell above X” figure. Yes, despite the excuses some sales agent might say, in Victoria, the law does not ban an agent from disclosing the reserve price.
So, what happens if reserves become more transparent?
For Sellers: Pros of disclosing the reserve
✅ Builds trust and goodwill with buyers
✅ Attracts more serious and realistic bidders who know it’s within their budget
✅ Reduces the risk of buyers feeling misled or “underquoted”
✅ Can still sell very strongly if multiple buyers are genuinely at or above that level
For Sellers: Cons of disclosing the reserve
❌ Fewer casual bidders on the day. You lose some competitive tension
❌ You remove the ability to quietly raise the reserve if the campaign is going better than expected
❌ You might create a glass ceiling on the price
❌ You lose leverage in post-auction negotiations. Buyers know exactly what you want.
Overall, for most vendors, the cons outweigh the pros. That’s why genuine reserve disclosures are very rare.
For Buyers: Pros of Knowing the Reserve Price
✅ You know upfront whether it’s worth attending or bidding
✅ Easier to plan a bidding strategy and set your walk-away number
✅ Less emotional manipulation. You’re not being used just to “get the bidding started”
✅ More transparency, less theatre
For Buyers: Cons of Knowing the Reserve Price
❌ You may face stronger competition from other serious buyers who now know it’s within reach
❌ The vendor might set the reserve unreasonably high if they think the market will tolerate it. Afterall, they can still negotiate with the highest bidder if the property passed in.
❌ Less chance of “getting lucky” if a nervous vendor might have reduced their reserve quietly on the day
Is Not Disclosing the Reserve Price a “Waste of Time”?
Well, that depends on who you are in the property sale and purchase transaction.
From a buyer’s perspective, yes – it often feels like:
A waste of Saturdays
A waste of emotional bandwidth
A waste of money on those unnecessary Pre Auction Building and Pest Inspections and Contract Reviews.
A process designed to extract maximum dollars with minimum transparency
From a vendor’s and Sales Agent’s perspective, it’s simply:
A strategic tool to maximise the final price
A way to keep options open until the last possible moment
A standard part of auction strategy, not a personal attack on buyers
A quick way to sell properties, without the hassle of negotiations, etc. Properties sold at auctions are unconditional.
The key is to be confident in real estate investing is to recognise and understand the game you’re playing, then decide how you want to respond.
How Can Buyers Protect Themselves in an Auction, Without Knowing the Reserve Price?
If you’re buying at auction in Melbourne (or anywhere in Australia), a few practical strategies help you fight back against the “mystery reserve” problem:
1. Ignore the Quoted Price Range. Do your Independent Homework.
Treat the advertised range as marketing, not the truth. Learn the Top 9 Tips to Win Auctions.
Look at recent comparable sales
Adjust for renovations, location, etc.
Build your own value range, then set your absolute walk-away number
If the property sells way beyond that, it was never yours in the first place.
The full process to manage auction is here.
2. Ask the Agent the Right Questions (and Read the Answers Properly)
You won’t get the reserve, but you can read between the lines, you can still ask:
“What level would definitely buy it prior?”
“Has the vendor rejected anything so far?”
“If it passes in, what price do they want to see to sell today?”
Sales agents will not give you a clean number most of the time. It is their tactical advantage. But their reply, how they reply, often tell you a lot.
3. Decide Whether to Hid, and How
If the property looks underquoted compared to reality:
You can still attend and bid, but go in with good discipline. Walkaway when you have to.
Avoid bidding just because “the crowd is moving” – that crowd isn’t paying your mortgage.
If you’re close but not quite in range:
Sometimes the smarter move is to let it pass in and see what happens in a private negotiation afterwards, particularly if bidding is weak.
4. Get a Professional in Your Corner
Property buying is always stacked against the Buyer. The Seller is supported with:
Listing agents
Auctioneers
Vendor’s advocates
Lawyers and conveyancers
While the only support on the buying side, is often only Google and nerves.
Do you homework diligently or employ a good buyers advocate who will:
Analyse true value, not agent spin
Read the campaign strength and likely vendor expectations
Provide live guidance/strategy during auction, whether to push, negotiate prior, or walk away
Bid on your behalf, protecting your price and nerves, without getting emotional and revealing your limit
Negotiate strongly with the sales agent if the property passes in.
The Case for Getting Assistance from Buyers Advocates. And it is Not Expensive.
In Australia and Melbourne, the property buying system is designed heavily in favour of the seller, having someone on your side who plays this game every week isn’t a luxury. It is a risk management necessity. The Buyers Advocates levels the playing field and moves the odds to your favour.
If you find yourself struggling with property auctions in Melbourne, do get in touch. For a small fee, our Auction Bidding and Negotiation service is a cost effective way to stay focused, bid confidently at auctions, and protect your budget and lessen your stress during auctions.
What Happens If the Law Forces Agents to Disclose the Reserve Price Before Auction?
The Victorian government recognises that underquoting seems rampant in the real estate industry, and not disclosing the reserve price is seen as one of the contributing factors to the feeling of the property being underquoted. So, they are intending to change this. There are plans to make the disclosure of reserve price compulsory.
Will this effectively stop underquoting? Will the sales agents work with or will they work around this new rule? I can bet, there will be ways around it. And we have already identified at least 5 ways the sales agents can navigate around this new rule. Read this article to find out if this will stop underquoting and how sales agents will work around this.
Will the Property Sell When the Auction Price is Over the Reserve Price?
Short answer: usually yes once a binding contract is formed – but the key is when that actually happens.
And this is where most people (and plenty of agents) blur the line. This article will discuss the situation and when it may not sell, even if the auction price is above the reserve. It is rare, but I does happen.
Is Disclosing the Auction Reserve Price a Fairer, More Balanced System?
In theory, it can, but in practice, no. Very unlikely, unless the other parts of the campaign are locked down or banned, which is very unlikely. Sales agents' loyalty is to the seller. They find ways to extract the highest price for the vendor. That’s literally legally their job. And to the sales agents' credit, that is the job they will do well.
You, as the buyer, your job is to understand the rules and various processes of the real estate game well, identify their weakness, then work with them.
Final Thoughts: Should Reserves Be Disclosed?
In an ideal world, yes. Reserve Prices would be clearer, property buyers would be more focused and would waste less time, and auctions would feel less like theatre and more like a transparent market process.
In the real world, the auction system is currently (and will always be selectively optimised) to:
Maximise outcomes for vendors
Optimise leverage for selling agents
Keep buyers just uncertain enough to turn up and bid
Until the law or the industry culture changes, the REAL Reserve Price will remain a closely guarded secret, now and in future.
As a buyer, your options are:
Learn the game, do your homework diligently and play it strategically
Or get someone who already knows how to play it on your side
Either way, don’t mistake “no reserve disclosure” for “no control”. You can never control the reserve price, but you can absolutely control how you adapt your strategy and engage with the auction and property sales process.
FAQ – Frequently Asked Questions Reserve Prices and Property Auctions
1. Is the reserve price the same as the quoted price range?
No. The reserve price is the vendor’s minimum acceptable sale price. The quoted price range is a marketing tool used to attract buyers. The range may be loosely based on comparable sales, but it’s also influenced by the agent’s strategy and the vendor’s expectations. Never assume the top of the quote range is the real reserve.
2. Can the reserve price change before the auction?
Yes. In most Australian states, the reserve can currently be changed at any time up until it’s formally set and the property is announced “on the market” during the auction. If buyer interest is strong, agents often encourage vendors to lift their reserve. If interest is weak, the reserve may be reduced to encourage a sale.
3. How do I know when bidding has reached the reserve price?
Listen for the auctioneer saying something like:
“Ladies and gentlemen, we’re now on the market and selling.”
That statement means bidding has reached or passed the reserve and, barring anything unusual, the property will be sold to the highest bidder. If you don’t hear those words, the property may still be below reserve and could be passed in.
4. Why don’t agents just tell buyers the reserve price?
Because keeping the reserve secret generally benefits the vendor:
It maintains competitive tension.
It keeps more bidders in the mix.
It allows the vendor to shift expectations as the campaign evolves.
It preserves information asymmetry, which gives the seller the upper hand.
Transparency makes buyers’ lives easier. Auctions aren’t designed for that.
5. What should I do if I think a property is underquoted?
Focus on your own valuation, not the quote.
Check multiple comparable sales (same suburb, similar land size, condition, and location quality).
Work out what you think is fair value and your absolute maximum.
If the campaign looks obviously underquoted, assume competition will push the price closer to its true market value.
If you’re consistently seeing properties sell way beyond where you expect, it may be time to reassess your budget or brief, or get professional help.
6. Would forcing agents to disclose the reserve price help buyers?
It would help a bit – mainly by:
Cutting down on auctions you attend with no real chance of buying
Making it easier to plan your bidding strategy
Reducing some of the guesswork and emotional manipulation
But agents would adapt by:
Pushing harder for pre-auction deals,
Adjusting quote ranges and “expectations” earlier, and
Using disclosed reserves as a floor, not a ceiling, to drive competition.
So yes, it helps – but it doesn’t magically turn auctions into buyer-friendly events.