Could pre-publishing auction reserves backfire on buyers and sellers?

Transparency is essential to a fair property market. Buyers deserve accurate information so they can make informed decisions, and sellers should have confidence that their property is being represented honestly.

But as governments introduce new rules around property price information, it is worth asking whether every measure intended to improve transparency will deliver better outcomes for buyers and sellers.

Victoria now requires sellers to publish their reserve price at least seven days before an auction or fixed-date sale and New South Wales has also passed reforms requiring a price or price guide in property advertising, with those changes expected to commence towards the end of 2026.

These are different approaches. A price guide is an indication of the agent’s estimate of a property’s likely selling price. A reserve is the minimum price a seller is prepared to accept at auction. The distinction could have real implications for the ACT and other states that have yet to change their laws.

The mechanics of an auction campaign

An auction campaign is generally designed to be short and focused, often running for around four weeks. During that time, prospective purchasers inspect the property, consider the information available and provide feedback to the agent.

In many cases, a seller will not settle on a reserve until late in the campaign, sometimes the night before or even on the morning of the auction. By then, they have had the benefit of several weeks of market feedback and a clearer picture of the level of interest.

Buyers may become more interested as they learn more about a property, while a seller’s expectations can change in response to feedback and the number of prospective bidders.

Requiring a reserve to be published earlier could change how those decisions are made, particularly in a market at the moment where pre-auction offers are commonplace.

Could buyers miss an opportunity?

A published reserve may help some buyers decide whether a property is likely to be within their budget. That is a reasonable objective, particularly for purchasers who have spent time and money investigating properties only to discover that the seller’s expectations are much higher than they anticipated, however, there may also be unintended consequences.

Consider a property with a published reserve of $900,000. A buyer with a budget of $875,000 may decide there is no point inspecting it or attending the auction. Yet if interest is lower than expected, the seller may be prepared to reconsider their position on the day.

In that situation, the published reserve could discourage a buyer who might otherwise have been in a position to purchase. The seller, in turn, may lose the opportunity to engage with a genuinely interested bidder.

This is not to suggest that publishing a reserve will always have that effect. It does, however, raise a question about whether a figure set before the end of a campaign will always reflect the price a seller is ultimately prepared to accept.

What it could mean for investors

For investors looking to buy, accessible and reliable information is particularly important. Alongside the purchase price, investors need to understand the condition of a property, its likely maintenance needs and, for a unit, the financial position of the owners corporation.

For investors looking to sell, the process is equally important. Whether they are adjusting their portfolio, responding to changing circumstances or exiting the market, sellers benefit from being able to consider buyer feedback as it develops.

A requirement to set and publish a reserve earlier may influence how sellers approach that decision.

If the reserve is set higher than the market is prepared to pay, interested buyers may decide not to participate. If it does not reflect the seller’s final position, it may provide less certainty than buyers expect.

The objective should be a sales process that gives buyers useful information while allowing sellers to respond to the market.

Transparency is more than a price

The ACT already has an approach to upfront disclosure that offers prospective purchasers valuable information before they decide whether to buy.

Depending on the property, the required sale documents can include building and pest inspection reports, an energy efficiency rating statement and information relating to an owners corporation. The requirements differ according to the type of property being sold. These documents are available at no upfront cost to prospective buyers. The eventual purchaser is then required to reimburse the seller for certain report costs at settlement.

This gives purchasers in the ACT an opportunity to consider information about a property before committing to a purchase or bidding at auction.

Publishing a reserve a week in advance in no way predicts the outcome of an auction. It captures a point in time that may be completely inaccurate as momentum builds (or wanes) throughout the final week based on the availability of competing properties right up until the hammer falls, given that buyers rarely have just one specific property on their radar.

Traditional auctions deliver results

Every property and campaign is different, and competition at this level should not be assumed.

For investors considering a sale, an auction campaign provides an opportunity to achieve a result within a defined timeframe and consider their feedback as the campaign progresses. For purchasers, it offers the opportunity to observe the competition and make their own decision about value.

Ultimately, a good outcome starts with buyers having the information they need to participate confidently and sellers being able to make informed decisions as their campaign unfolds.

Prematurely focusing on one number does neither the seller nor the buyer any favours. In the ACT there is no talk of amending their pricing legislation at this stage, preferring free market forces to determine a property’s value without unnecessary government intervention.