AUCTION GUIDES · 9 MIN READ
How to set your reserve price
The reserve is the only number in your campaign you control outright. It is also the one most often set in ten minutes, at a kitchen bench, on the morning of the auction.
Short answer
Your reserve is the lowest price you will accept on the day. It is your decision, not your agent’s. Set it from what your campaign actually told you about buyer depth, not from the appraisal you were given before the campaign started, and commit to a single number in writing before auction morning.
Key takeaways
- The reserve is the vendor’s decision. An agent recommends; they do not decide.
- The appraisal figure is an input, not the answer. Four weeks of campaign data is better evidence than a number produced before a single buyer walked through.
- Three failure modes account for most bad reserves: anchoring to the appraisal, setting the number on auction morning, and setting a range instead of a figure.
- Enquiry volume, inspection numbers and contract requests tell you how many genuine bidders you have. Two or more changes what a reserve can safely be.
- Decide your genuine walk-away number days out, in writing, while you are calm.
What a reserve price actually is
A reserve price is the minimum you are willing to accept for your property at auction. It is the trigger for the single most important sentence an auctioneer says all day: the property is now on the market.
Below the reserve, nothing binds you. The bidding can run for ten minutes and stop $60,000 short, and you walk away owning your house. At or above the reserve, the property sells to the highest bidder when the hammer falls, and that is a binding contract with no cooling-off period for the buyer.
So the reserve is a switch. Everything before it is theatre and information gathering. Everything after it is a sale. Which is why the number matters more than almost any other decision in the campaign, and why it deserves more than the ten minutes it usually gets.
Who sets it, and who only recommends
You set it. The agent recommends a figure, the auctioneer will have a view, and both should be able to explain their reasoning in detail. But the reserve cannot be set without the vendor’s instruction, and no amount of confident phrasing changes that.
This distinction sounds obvious written down. It is much less obvious at 10.20am on auction day when three people who do this professionally are sitting across from you, the auction is in forty minutes, and the conversation opens with a number rather than a question.
The agent recommends. The vendor decides. If that ever feels reversed in the room, the process has gone wrong, not your instincts.
Ben Williams, Founder
There is a structural reason this happens, and it is worth naming plainly rather than implying. An agent on a percentage commission is paid a great deal more for selling your house than for not selling it, and only slightly more for selling it well than for selling it at all. On a $1.2 million sale, the difference between $1.2m and $1.15m is $50,000 to you and roughly $1,100 to an agent on 2.2 per cent. Those two parties do not feel that $50,000 the same way.
Ben’s insightThis is not an accusation of bad faith. Most agents recommending a reserve genuinely believe the number. The point is narrower and harder to argue with: the person advising you carries almost none of the downside of being wrong on the low side, and you carry all of it.
This is the same incentive gap that shows up in how properties get quoted in the first place, and it is the reason we charge a flat fee rather than a percentage.
Set the reserve on evidence, not on what you were told to expect.
A free AI valuation reads the comparable sales around your address and returns a defensible range in about a minute.
Get Free Instant ValuationThe three ways reserves get set badly
Across a few thousand auctions, bad reserves are remarkably consistent. Almost all of them are one of three things.
Anchored to the appraisal
The appraisal was produced before your campaign ran. It was an estimate built from comparable sales and an agent’s read of the market, given to you at a time when the agent was also competing to win your listing.
Four weeks later you have something far better: evidence. You know how many people enquired, how many came through, how many asked for a contract and how many are still talking to you in week four. Setting the reserve at the appraisal figure throws all of that away and treats the least informed number in the campaign as the most authoritative.
Anchoring cuts both ways. A reserve anchored to an optimistic appraisal passes in a property that had a genuine buyer at a fair price. A reserve anchored to a conservative one sells a property for less than the room would have paid.
Set on auction morning, under pressure
The most common version of this: the reserve conversation happens between 60 and 20 minutes before the auction, in the vendor’s kitchen, with the vendor already stressed and the clock visible to everyone.
Nobody makes good six-figure decisions in that state. The vendor is outnumbered by people who do this weekly, they have no time to check anything, and the only path that ends the discomfort is agreement.
The fix is not to refuse the morning conversation, which is often a legitimate final confirmation. The fix is to arrive at it having already decided your genuine walk-away number, days earlier, in writing, while calm. Then the morning meeting is a review rather than a decision.
Set as a range instead of a number
Vendors who cannot decide often say something like ‘somewhere around $1.15m to $1.2m’. That is not a reserve. It is a decision deferred to the single most pressured moment of the whole campaign.
An auctioneer needs one number to work with, because the announcement is binary. Either the property is on the market or it is not. A range means someone else resolves your ambiguity in real time, and it resolves downward essentially every time.
The pattern to watch forIf your reserve is being discussed for the first time on the morning of the auction, and the figure being proposed is materially below what your campaign evidence supports, those two things together are the classic setup. Neither on its own is alarming. Together they are worth pausing on.
Reading your campaign to find the number
A reserve should be built from what the campaign actually produced. The useful question is not ‘what do I want’ or even ‘what is it worth’. It is narrower and much more answerable: how many genuine competing bidders will be in the room, and what is the second-highest one willing to pay?
That second part is the whole game. An auction price is not set by your top buyer. It is set by the point at which your second-best buyer stops. One buyer with deep pockets and no competition will not pay a premium, because nothing forces them to.
The four signals that matter
| Signal | What to look at | What it tells you |
|---|---|---|
| Enquiry volume | Total enquiries, and the trend across weeks one to four | Whether the price expectation is landing. Enquiry that starts strong and collapses usually means the quoted range attracted people the property could not satisfy. |
| Inspection numbers | Groups through each open, and repeat visits | Repeat inspections are the strongest single signal. Buyers who come back twice, or bring a partner, parent or builder, are shortlisting. |
| Contract requests | How many contracts issued, and how many went to a solicitor or conveyancer | The clearest intent signal short of a bid. A contract that has been reviewed by a buyer’s lawyer represents real money spent on your property. |
| Buyer depth in week four | How many separate parties are still actively engaged | The number that matters most. Two or more genuine parties supports a firmer reserve. One party means you are negotiating, whatever the method of sale is called. |
These are the four inputs worth writing down before any reserve conversation. If your agent cannot give you all four, that itself is information.
How the signals translate
There is no formula that converts enquiry numbers into a dollar figure, and anyone offering one is selling something. What the signals do is tell you how much confidence the reserve can carry.
| Buyer depth at week four | What it supports |
|---|---|
| Three or more active parties | A firm reserve at the upper end of your evidence. Genuine competition is likely and the auction will do its job. |
| Two active parties | A reserve set on the evidence, held with some flexibility. Two bidders is a real auction, but it is fragile if one does not turn up. |
| One active party | Treat the day as a negotiation. A high reserve here does not create competition, it just guarantees a pass-in and hands the buyer the initiative. |
| No active parties | The reserve is not the problem. Price expectation, campaign or method needs revisiting before auction day, not on it. |
Buyer depth is the input that should move your reserve the most, and the one most often left out of the conversation entirely.
Ben’s insightThe reserve conversation I want to have with a vendor sounds like this: here are the four numbers from your campaign, here is what they say about who is likely to bid, here is the range that evidence supports, and here is where I would sit inside it and why. Then the vendor chooses. If the conversation does not contain those four numbers, it is not a recommendation, it is a preference.
The conversation to have with your auctioneer
Before auction day, get your auctioneer on the phone. Not the agent, the person who will actually be calling it. These are the questions worth asking.
- How many registered or expected bidders are you aware of, and how many do you rate as genuine?
- At what point will you announce the property is on the market?
- If bidding stalls below the reserve, what will you do, and what will you ask me to do?
- What are you going to say to me in the huddle, and what decision will you be asking for?
- If we pass in, who gets the first right to negotiate, and how long do they have?
- What is your read on the second-highest bidder, and what do you think they will stop at?
The fourth question is the one that changes the day. The huddle, when the auctioneer walks over to the vendor mid-auction, looks to the crowd like a strategy conference. Most of the time it is a request to lower the reserve. Knowing that in advance means you are not hearing the proposition for the first time with two hundred people watching you.
Decide your floor in writingBefore auction day, write down the number below which you will not sell, and why. Not a hoped-for figure, a genuine walk-away. Keeping your own house is a real and often sensible outcome. Vendors who have written the number down hold it. Vendors who have only thought about it usually do not.
What happens if you do not reach it
The property is passed in. It does not sell on the day, and in most cases the highest bidder is given the first opportunity to negotiate with you before the property returns to the open market.
A pass-in is not a disaster and it is not a verdict on your house. It is a piece of information: at this reserve, on this day, in front of this crowd, the market did not get there. What you do in the following 48 hours matters considerably more than the pass-in itself, and the advice you receive in that window is worth reading carefully.
We have written that up separately in passed in at auction: what now, including how the highest bidder’s negotiating right works, the three options in front of you, and what a pass-in does to your days on market.
How the rules differ by state
Auctions are regulated at state level, and the differences are not cosmetic. Bidder registration, how and when a reserve must be recorded, what an auctioneer is allowed to announce, whether and how vendor bids can be made, and the deposit and contract terms that follow the hammer all vary depending on where the property is.
Victoria in particular has been the subject of ongoing change to how reserves and price expectations are handled, and Victorian vendors should confirm the current position before setting a campaign, rather than relying on how an auction worked the last time they sold.
General information, not legal adviceThis guide explains the mechanics of setting a reserve, not the statutory requirements in your state, which change and which differ meaningfully between jurisdictions. Confirm the current rules with your agent, your conveyancer or your state’s consumer affairs or fair trading body before your campaign. A state-by-state comparison is in preparation and will be published in this cluster.
Impressed by the AI valuation
“Used the AI valuation tool from Unreserved and was seriously impressed. Within a couple of minutes it generated a really detailed valuation report with smart insights around the property, the local market, and even value-add opportunities from renovations. It felt genuinely useful in mapping out our next steps, not just a generic automated estimate.”
Alistair Ferguson · Google · Local Guide
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Get Free Instant ValuationCommon questions
What is a reserve price?
A reserve price is the minimum you are willing to accept for your property at auction. If the bidding reaches it, the property is on the market and will sell to the highest bidder. If the bidding stops below it, the property is passed in and does not sell on the day.
Who sets the reserve price, the vendor or the agent?
You do. The agent and auctioneer recommend a figure and should explain their reasoning, but the reserve is the vendor’s decision and cannot be set without your instruction. If you are ever told the reserve has already been decided, that is the moment to slow the process down.
When should the reserve be set?
The number should be discussed throughout the campaign as buyer feedback comes in, and confirmed shortly before the auction so it reflects the actual buyer depth in the room rather than the appraisal figure from four weeks earlier. Requirements for how and when a reserve is recorded vary by state, so check what applies where you are selling.
Can I change my reserve on auction day?
In practice the reserve is often confirmed on the morning of the auction, and vendors can and do adjust it. That flexibility is exactly why it is worth deciding your genuine walk-away number days in advance, in writing, before the pressure of the day is on you.
Should the reserve be the same as the quoted price range?
Not necessarily, and it is a mistake to assume it must be. The quoted range and the reserve are different things governed by different considerations. Price advertising rules vary by state and are worth understanding separately before your campaign starts.
What happens if the bidding does not reach my reserve?
The property is passed in. It does not sell at the auction, and in most cases the highest bidder gets the first opportunity to negotiate. What happens next, and how much leverage you keep, is covered in our guide to being passed in at auction.
Is a reserve price legally binding?
Once bidding reaches or passes your reserve, the property is on the market and the highest bid at the fall of the hammer forms a binding contract. Below the reserve you are not obliged to sell. The specific rules on how a reserve must be set and recorded differ between states.
Can I set my reserve as a range rather than a fixed number?
You should not. A range is not a decision, it is a decision deferred to the most pressured moment of the campaign. Auctioneers need one number, and vendors who arrive with a range almost always end up at the bottom of it.
ABOUT THE AUTHOR
Ben Williams
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Ben spent 15+ years as a licensed estate agent and conducted over 2,000 auctions before founding Unreserved. He holds a Bachelor of Applied Science (Property & Valuation) from RMIT and is licensed across VIC, NSW, QLD, SA, and WA.