Under Victorian law, a reserve price must be set before bidding opens. While you can effectively sell “without reserve” by setting the price at a nominal amount, this means the property will sell unconditionally to the highest bidder regardless of the final price.
Selling without a reserve removes the vendor’s safety net. With the Melbourne clearance rate falling to 59.1% in the week ending 11 April 2026 (Cotality), the risk of selling significantly below market expectations has increased.
The legal requirement for a reserve
Victorian law requires the vendor and agent to agree on a reserve price before the auction commences. This figure acts as the minimum price the vendor is willing to accept for an unconditional sale on the day.
Risks of selling without a reserve
A no-reserve strategy guarantees a sale but removes price control. Current data shows the median auction price for houses was $937,500 for the week ending 11 April 2026, a 6.3% decrease compared to the same week in 2025 (Cotality).
The pass-in process
If bidding does not reach the reserve, the property is “passed in.” Under CAV rules, the highest bidder earns the first right to negotiate privately with the vendor, though buyers often anchor their offers below the reserve in this scenario.
The buyer sentiment risk
Buyers are increasingly aware of vendor positioning when properties pass in. Because approximately 35–40% of Melbourne properties do not sell on auction day in 2026, buyers often perceive the vendor’s position as weaker during post-auction negotiations.
| Metric (Week ending 11 April 2026) | Current Value | Previous Week |
|---|---|---|
| Melbourne Clearance Rate | 59.1% (Cotality) | 61.4% (Cotality) |
| Median Auction Price (Houses) | $937,500 (Cotality) | $1,021,000 (Cotality) |
| House Clearance Rate | 57.2% (Cotality) | Not provided |
Frequently asked questions
How long does a typical auction campaign take?
A standard auction campaign in Melbourne lasts four weeks from the initial listing to the auction date. During this period, agents typically conduct two open for inspections per week to generate buyer interest and competition before the final sale day.
Is there a cooling-off period for auction sales?
No. Auction sales in Victoria are unconditional, meaning there is no cooling-off period. Contracts are signed on the day, and a deposit, typically 10% of the purchase price, is paid immediately upon the fall of the hammer.
What happens if the property passes in at auction?
When a property is passed in, it has not met the reserve price. The highest bidder is granted the legal right to negotiate privately with the vendor first under CAV rules, and most passed-in properties sell via private negotiation within a few weeks.
How should I set my reserve price?
Vendors should ensure their reserve price aligns with the agent’s advertised price guide. Under Victorian law, agents cannot advertise a property below the reserve or the estimated selling price to avoid underquoting and ensure transparency for buyers.
Questions to ask your agent
- What is the specific post-auction negotiation strategy if the property passes in?
- How does the current clearance rate in our specific eastern suburb corridor compare to the 59.1% city-wide average?
- Based on current buyer feedback at inspections, is the advertised price guide aligned with the reserve I want to set?
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.