Homer analysed over 16,000 Victorian auction results to understand what mandatory reserve disclosure will actually mean for buyers.
The Allan Labor Government has announced what it calls "Australian-first" legislation requiring real estate agents to publish the vendor's reserve price at least seven days before auction. The bill is expected to be introduced to Parliament around May 2026. The stated goal is to stamp out underquoting and give buyers confidence that the price they see is the price that matters.
It sounds good. But Homer's data tells a different story.
We analysed 16,632 Victorian auction results, 162 where the reserve was voluntarily disclosed and 16,470 where it was not, and the findings suggest the reform will shift the underquoting game rather than end it.
For almost every auction campaign in Victoria, buyers encounter three price signals: the bottom of the guide range, the top of the guide range, and (under the reform) the reserve. That is three numbers agents and vendors can position relative to each other.
The guide range is set by the agent based on comparable sales. The reserve is set by the vendor. The reform assumes that publishing the reserve closes the gap between what is advertised and what the vendor will accept. Our data suggests it just creates a third number to manage.
Critically, the reserve must sit within the guide range, but the guide range itself can be revised upward during the campaign. So the sequence becomes: open with a low guide, revise it upward before the seven-day window, and set the reserve within that new, higher range. The buyer has spent weeks engaged based on a guide that was never realistic.
We compared auction outcomes where reserves were voluntarily disclosed against those where they were not.
Homer uses the last observed price guide for each listing, taking the maximum of the range where a range was advertised. This means the guide figure represents the top of the final advertised range, the most conservative benchmark for measuring underquoting. If a guide was revised upward during the campaign, the final higher figure is what appears in this data.
Reserve % is calculated as (sold price minus reserve) divided by reserve price. A positive figure means the property sold above the reserve.
Guides are broadly accurate. Reserves are not. The median guide landed exactly at the eventual sale price (0.0% gap) for reserve-disclosed properties. But the median reserve sat 2.4% below where properties actually sold. This tells you reserves are being set below realistic sale expectations even when the guide itself is accurate. The reserve is not functioning as a genuine minimum. It is a strategically low number designed to attract bidders, exactly the role the guide plays today.
Disclosure does not dampen competition. 21.6% of reserve-disclosed properties sold more than 10% above the guide, compared to 13.2% where no reserve was disclosed. And 24.1% sold more than 10% above the disclosed reserve itself. Buyers still showed up, still competed, and still drove prices well past the reserve.
The reform assumes a single model of agent behaviour. In practice, agents will adapt differently depending on whether a property is in high demand or sitting in a softer market. The game splits in two.
For desirable properties in strong markets, the agent's incentive is unchanged. Set the reserve low, attract a crowd, let competition drive the price well past the reserve on auction day. The reserve is technically accurate (the vendor genuinely would accept that amount) but it is not a realistic indicator of the expected sale price. It functions exactly the way a low guide does today.
Our data supports this. In Melbourne Inner, 69.0% of disclosed-reserve auctions sold above the reserve. In the North East, 65.8%. The reserve was real. The vendor would have accepted it. But the property was always going to sell for more, and the agent knew it.
The safety valve is cancellation. If a hot property unexpectedly draws thin interest after the reserve is published, the agent cancels the auction and moves to private sale or expressions of interest. The vendor is no worse off.
For properties in softer markets or where vendor expectations are uncertain, the playbook is different. The agent runs the campaign on a low guide range for the first three weeks to generate traffic and build a buyer pool. Buyers attend opens, order building inspections, brief solicitors, and invest emotionally in the property.
Before the seven-day disclosure window, the agent revises the guide range upward and sets the reserve within the new, higher range. The reserve is within the guide, so it is compliant. But the buyer has spent weeks engaged based on a guide that was never where the vendor intended to sell.
If the revised numbers still do not attract sufficient interest, the agent cancels the auction and the property moves to private sale. The buyer has wasted time and money on due diligence for a property that was never going to sell at the price that drew them in.
Our Inner East data illustrates this risk. Only 8 properties disclosed reserves in that region, and 62.5% sold below reserve. These are exactly the properties where, under mandatory disclosure, the auction would likely be pulled rather than risk a public pass-in against a known number.
Both scenarios share a common exit: cancellation. The reform says auctions cannot proceed without a disclosed reserve. It does not say anything about what happens when an auction is cancelled after the reserve has been disclosed. The vendor and agent can read the market during the seven-day window, pull the auction if the numbers do not stack up, and shift to a sales method with no public pricing requirements. The reform inadvertently creates an incentive to avoid auctions altogether in situations where the outcome is uncertain.
The core problem is not that the reserve is hidden. It is that the entire pricing journey from listing to sale is not transparent or accountable. Reforms that target the full lifecycle of a campaign would be more effective than a single data point seven days out.
Guide change tracking. Require all guide changes to be publicly logged with timestamps. Buyers should be able to see how the guide evolved during the campaign, not just the final number. Homer already tracks this.
Tighter comparable sales rules. The November 2025 update to comparable sales checklists was a step forward. Further tightening (mandatory appraisal methodology, independent audit of comparable selection) would improve guide accuracy at the source.
Post-sale disclosure. Require public disclosure of the final guide range, reserve, and sold price for every auction and fixed-date sale. This would allow retrospective analysis and create accountability for agents who systematically set guides or reserves well below eventual sale prices.
Penalties proportional to the gap. Instead of fixed fines, link underquoting penalties to the gap between the guide (or reserve) and the sold price. A property that sells 30% above its guide should attract a proportionally larger penalty than one that sells 5% above.
The 162 reserve-disclosed properties are a self-selected sample. Vendors who chose to disclose voluntarily are likely those confident in strong demand, which skews the "sold above" rate upward. Under mandatory disclosure the full spectrum of vendor confidence would be represented and results may differ.
Homer's dataset covers Melbourne metro, with a small number of regional Victorian results. Other parts of regional Victoria and other states may show different dynamics.
The legislation has not yet been introduced. The detail of the bill, including whether reserves can be revised within the seven-day window, how vendor bids interact with the disclosed reserve, and what happens when auctions are cancelled after disclosure, will materially affect how the reform plays out in practice.
Homer aggregates listing data across realestate.com.au, Domain, and Homely to give property buyers transparency tools including auction price guide accuracy tracking, underquoting pattern detection, and agent grading. Learn more at homerapp.com.au.
