Setting Your Auction Reserve Price in Queensland: What Sellers Need to Know
The reserve is the most consequential number you set before auction day. Here is how to think about it, what Queensland law requires, and what your options are if bidding falls short.
The reserve price is the minimum amount a seller is prepared to accept at auction. Once bidding exceeds the reserve, the property is on the market and must be sold to the highest bidder. Below the reserve, the auctioneer cannot sell the property without the seller's explicit authority. It is a simple concept, but the decisions around it, including where to set it, whether to disclose it, and what to do if bidding does not reach it, are among the most consequential a seller makes during a campaign.
What the reserve price actually does
The reserve serves as your floor. It protects you from being compelled to sell at a price you are unwilling to accept, regardless of how competitive or uncompetitive the auction room turns out to be. Without a reserve, an auctioneer would technically have the authority to sell the property to whoever makes any bid, however low. That is not how auctions operate in practice, but the reserve is the legal mechanism that formalises your protection.
The reserve is set in a document called the reserve price authority, which is signed by the seller before the auction begins. In Queensland, this typically happens on the morning of auction or in the preceding days, after you have reviewed the campaign's enquiry levels and had a final conversation with your agent. You can set it at any point before the auction begins; you cannot change it during the auction once bidding has started.
It is worth understanding that the reserve and the price guide are two different things. The price guide is the range advertised to buyers as an indication of what the seller expects to achieve. In Queensland, agents have obligations under the Property Occupations Act 2014 to ensure price guides are not misleading. The reserve must sit within a reasonable range of the advertised guide. An agent cannot advertise a property at $900,000 to $950,000 and then instruct the auctioneer with a reserve of $1.2 million without that being a potential breach.
How to set the reserve
The most useful input for setting your reserve is the campaign data you have accumulated over the preceding three to four weeks: how many groups attended your open homes, how many made enquiries, how many have confirmed they will bid on auction day, and what comparable sales in your suburb and price bracket have achieved in the last 60 to 90 days.
Your agent should bring this analysis to the reserve price conversation. A reserve that is set with reference to real data is a more defensible position than one set on gut feel or on what you originally hoped the property might be worth when you first considered selling.
The most common mistake is setting the reserve too high relative to what the market is telling you. A reserve that the campaign's buyer pool cannot reach results in a passed-in outcome, which introduces complexity and typically reduces your use in post-auction negotiation. If your agent's analysis suggests genuine buyer interest sits in a particular range, the reserve should generally be set at the bottom of that range, not above it. This maximises the chance that competitive bidding drives the price upward from that point.
Some sellers set the reserve at the minimum they would accept, which is a rational approach. Others set it slightly above their true floor to give themselves some room in post-auction negotiation. Both approaches are valid, but the difference between the two should be measured in increments of 2 to 5 percent, not 15 to 20 percent. A reserve that sits well above genuine market interest is not a negotiation strategy; it is a campaign that fails to sell.
Do you have to disclose the reserve to buyers?
No. In Queensland, sellers are not required to disclose the reserve price to prospective buyers. The reserve is a private instruction between the seller and the auctioneer. Buyers attending the auction do not have a right to know it, and agents are not permitted to reveal it without the seller's authority.
What agents can and should do is provide an accurate price guide throughout the campaign, and update that guide if the market feedback suggests the original range needs adjustment. Buyers use the price guide to decide whether to attend and register to bid. A guide that significantly understates where the reserve actually sits is not in the seller's interest, because it attracts buyers who cannot bid at the relevant price level, inflating open home numbers without producing genuine competition on the day.
Some sellers instruct their agent to communicate a vendor bid strategy, which signals to buyers that the auctioneer may place bids on the seller's behalf to start or maintain momentum. Under Queensland's Property Occupations Act 2014, vendor bids must be clearly identified as such by the auctioneer. They are legal, but they must be disclosed in the auction conditions and called out at the time they are placed. An undisclosed vendor bid is not permitted.
What happens if bidding does not reach the reserve
If the highest bid on the day falls short of your reserve, the auctioneer will announce that the property has been passed in. This is a formal outcome, not a failed sale. It means the auction has concluded without a sale at reserve, and that negotiation may now occur.
When a property is passed in, the highest bidder at the time of passing in has the first right to negotiate with the seller. This is an important and often underappreciated protection for buyers, and sellers should understand it from the other side: the person you are most likely to sell to immediately after auction is the person who was bidding highest on the day.
Post-auction negotiation after a passed-in result can proceed in one of two ways. The seller can authorise the agent to negotiate with the highest bidder at any price above the reserve, or they can instruct the agent to hold at a specific number. The more useful question at this point is not what price you originally wanted, but what price the market has actually produced, and whether the gap between the highest bid and your reserve reflects a genuine difference in value or a strategic decision on the bidder's part.
Buyers who bid below reserve at auction are not always at their ceiling. Many experienced auction buyers deliberately bid conservatively, expecting to negotiate post-auction. Your agent's job in that conversation is to present comparable evidence that supports your position and to create appropriate urgency, particularly if other interested parties from the campaign might re-engage.
If no sale is agreed after auction, the property typically reverts to a private treaty campaign. The price guide will generally be updated to reflect the evidence from auction day, and enquiry from buyers who attended or tracked the campaign will often resume. Properties that are passed in at well-attended, genuinely competitive auctions in Brisbane's inner east frequently sell within one to two weeks of auction at or close to the auction high bid.
A note on vendor bids
A vendor bid is a bid placed by the auctioneer on behalf of the seller, below the reserve. Auctioneers use vendor bids to start the bidding when the room is slow to open, or to maintain momentum when bidding stalls at a level well below the reserve. They are a normal part of Queensland auctions and buyers are accustomed to them.
What vendor bids cannot do is push bidding past the reserve. Once the reserve is reached through genuine bidder competition, the auctioneer cannot place further vendor bids. The reserve functions as the point at which vendor bidding must stop and the property must be sold to the highest genuine bidder.
If you are selling by auction and your agent has not explained the vendor bid strategy they intend to use, ask before auction day. Understanding how your auctioneer plans to handle a slow start or a stalled auction gives you more context for the reserve decision and avoids surprises on the day.
Considering auction? Daniel works with sellers across Brisbane's inner east and has a clear view of what the current buyer pool looks like in most inner-east suburbs. If you want an honest read on whether auction is the right method for your property and what a realistic reserve might look like, get in touch.