Understanding Reserve Prices at Property Auctions
What Is a Reserve Price at a Property Auction?
The reserve price is an important part of many property auctions. Understanding what it means can help sellers have clearer conversations with their agent and auctioneer before auction day.
The Short Answer
A reserve price is generally the minimum price at which a seller has authorised a property to be sold at auction.
If bidding reaches or exceeds the reserve, the property may be able to be sold to the highest bidder, subject to the auction rules and requirements that apply to that sale.
How Does a Reserve Price Work?
The Seller Sets a Minimum Position
The reserve helps establish the minimum level at which the seller is prepared or authorised to sell the property at auction.
The Auctioneer Monitors the Bidding
As bids are placed, the auctioneer manages the auction and determines when the bidding has reached a point where the property can be sold, subject to the applicable auction process.
The Property May Be Declared on the Market
Depending on local practice and auction rules, the auctioneer may indicate that the property is on the market once the required selling position has been reached.
The Highest Bid Can Become Important
If bidding reaches the required level and no further bids are made, the property may be sold to the highest bidder in accordance with the applicable auction process.
How Should a Seller Think About Setting the Reserve?
Setting a reserve is an important decision and should usually involve a detailed discussion with your selling agent and auctioneer.
They may discuss buyer feedback, comparable sales, interest during the campaign, offers received, market conditions and the likely level of competition on auction day.
A reserve should not be confused with an estimate of what the auction will definitely achieve. The final result depends on the buyers who participate and how the bidding develops.
Reserve Price and Seller Expectations Are Not Always the Same Thing
A seller may have an ideal result in mind, but the reserve price serves a different purpose. It is part of the decision-making framework around whether the property can be sold during the auction.
Your agent may recommend separating your preferred outcome from the minimum position you are prepared to consider.
The right approach depends on the property, market conditions, campaign performance and your own circumstances.
What Happens if Bidding Does Not Reach the Reserve?
If bidding remains below the reserve, the property may be passed in rather than sold under the hammer.
The selling agent may then speak with you and interested buyers about whether further negotiation should take place.
This does not necessarily mean the campaign has failed. A sale may still be negotiated after the auction, depending on the circumstances.
Can a Reserve Price Change?
The rules around setting, recording, changing and disclosing a reserve price can differ depending on where the property is located.
Sellers should confirm the process that applies to their auction with the selling agent and auctioneer before making any changes.
Useful Questions to Ask Before Setting a Reserve
- What feedback have buyers given during the campaign?
- How many buyers appear ready to bid?
- What comparable properties have sold recently?
- When does the reserve need to be confirmed?
- Who needs to approve or record the reserve?
- What happens if bidding stops below the reserve?
- Can the reserve be changed, and if so, what process applies?
- What should I expect if the property is passed in?
How Can Auction Technology Support the Process?
Modern auction platforms can help agencies manage auction information, bidder registrations, live bidding and property status within one connected environment.
Auctions Live also includes reserve-related tools that can support the agency's auction workflow, while the legal and procedural requirements applying to the reserve remain the responsibility of the relevant parties conducting the auction.
Common Questions About Reserve Prices
Is the reserve price the same as the expected sale price?
Not necessarily. The reserve is generally the minimum price at which the seller has authorised the property to be sold at auction, while the eventual sale price may be higher or lower than earlier expectations.
What happens when bidding reaches the reserve?
Once the required selling position has been reached, the property may be able to be sold to the highest bidder, subject to the auction rules and requirements applying to the sale.
What if bidding stops below the reserve?
The property may be passed in and further discussions may then take place between the seller, agent and interested buyers.
Who should I speak to about setting my reserve?
Your selling agent and auctioneer can explain the process, provide campaign feedback and discuss the requirements that apply to your property.
General Information Disclaimer
This article provides general information only and does not take into account the laws, regulations, auction requirements or property practices that may apply in a particular country, state or territory.
Requirements can vary depending on the property, location and circumstances. Sellers should seek appropriate professional advice and confirm any specific requirements with the relevant real estate agent, auctioneer, legal adviser or other qualified professional before acting.
Posted 11th October, 2026