What happens when a property is passed in at auction?
I always find questions people ask me interesting... I never assume my clients know everything there is to know and I believe there is no such thing as a silly question.
A question I often get asked is ‘what happens when a property is passed in?’
I think it’s important to share this information as it can sometimes be used as a strategy for success.
There are several things that can happen at an auction for both buyers and sellers. One of the key things to understand is what could happen, how to be prepared for it, and to know what to do.
When a property passes in it is either passed in on a VENDOR BID, meaning no one got involved in bidding so the auctioneer places vendor bids to encourage engagement from the buyers. If there are no further bids, the property is passed in on a vendor bid.
When this happens, the property is automatically transferred to a private sale arrangement where anyone can negotiate with the vendor. The property is advertised with the asking price and usually opened for inspection soon after the auction. Auction conditions still apply for a further 3 business days. This means it is still an unconditional sale unless other terms are negotiated and agreed upon as part of the sale.
The other way a property is passed in, is to the HIGHEST BIDDER, meaning the vendor’s reserve price has not been met. The buyer with the highest bid is taken inside and has exclusive rights to negotiate with the vendor. The agent will tell the buyer the vendor’s reserve price and negotiations begin. If the buyer and vendor do not reach an agreed price, the buyer walks away empty handed. Other buyers can then have an opportunity to negotiate following the auction. The property can either be sold after the auction this way or, if no one is prepared to pay the asking price the property is then advertised with the asking price and opened for inspection soon after. Auction conditions still apply for a further 3 business days. Meaning it is still an unconditional sale unless other terms are negotiated and agreed upon as part of the sale.
If you are buying or selling a property at auction, it can feel quite overwhelming. The worry, fear, confusion and not being prepared is what drives us to make snap decisions. Which is why it’s so important to make the right decisions and be confident on the day.
Understanding the process is one way to overcome any confusion or regrets for making a wrong, or bad decision.
If you need an expert on your side to help relieve some of the pressure and guide you through the selling or buying process, this is a small part of the services I offer as a Property Advocate.
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