The reserve price is the minimum amount a vendor is willing to accept, which must be set before bidding opens under Victorian law. If bidding reaches this figure, the property is “on the market” and sells unconditionally to the highest bidder. If the reserve is not met, the property is “passed in,” and the highest bidder gains the first right to negotiate privately under CAV rules.
Setting a reserve is a strategic decision that balances vendor expectations against actual buyer appetite. With Melbourne clearance rates falling to 59.1% for the week ending 11 April 2026, the gap between reserve prices and final bids has widened.
How the reserve is established
The vendor and agent agree on the reserve price before the auction begins. This must be finalised before bidding opens to comply with Victorian law. Given that RBA rate hikes in February and March 2026 have pressured borrowing capacity, setting a realistic reserve is critical to avoid a pass-in.
What happens when the property is “on the market”
Once bidding reaches the reserve price, the property is officially “on the market” and will sell to the highest bidder. These sales are unconditional, meaning there is no cooling-off period and a deposit, typically 10%, is paid immediately. Settlement usually occurs 30 to 90 days after the auction.
The process of passing in
If bidding fails to reach the reserve, the property is “passed in.” Under CAV auction rules, the highest bidder then has the first right to negotiate privately with the vendor. Currently, approximately 35–40% of Melbourne properties do not sell on auction day, though most sell via private negotiation within a few weeks.
The post-auction anchoring risk
Vendors whose properties pass in often find buyers anchoring their offers below the original reserve price. Buyers are aware that a pass-in suggests a weaker vendor position than the agent may frame. This makes establishing a firm walk-away price before the auction essential.
| Metric (Houses) | Week ending 11 April 2026 | Same week 2025 |
|---|---|---|
| Melbourne Clearance Rate | 59.1% | 66.8% |
| Median Auction Price | $937,500 | $1,001,000 |
Frequently asked questions
Can I change my reserve price during the auction?
Under Victorian law, the reserve price must be set before bidding opens. While vendors and agents agree on this figure prior to the event, the reserve acts as the fixed threshold for the property to be declared “on the market” and sold unconditionally to the highest bidder.
Is an auction sale unconditional?
Yes. Auction sales in Victoria are unconditional, meaning there is no cooling-off period. The contract is signed on the day, and the buyer typically pays a 10% deposit immediately. Settlement then usually occurs within 30 to 90 days post-auction.
What happens if my property is passed in?
If bidding does not reach the reserve, the property is “passed in.” Under CAV auction rules, the highest bidder is granted the first right to negotiate privately with the vendor. Many passed-in properties sell within a few weeks via these private negotiations.
How do RBA rate hikes affect auction results?
RBA rate hikes in February and March 2026 have contributed to lower clearance rates. For example, the Melbourne clearance rate fell to 59.1% for the week ending 11 April 2026, compared to 66.8% during the same week in 2025 (Latest auction data, April 2026).
Questions to ask your agent
- Based on the current 59.1% clearance rate, what is the specific risk of my property passing in?
- If we pass in, what is our negotiation strategy to prevent buyers from anchoring their offers below the reserve?
- How have the RBA rate hikes in February and March 2026 specifically affected the buyer pool for my property’s price bracket?
This article contains general market information based on data current as at April 2026. It does not constitute financial, legal, or real estate advice specific to your property or circumstances. For an appraisal and tailored advice, speak with a Fletchers agent in your area.