Auction Pass In

The market was extremely strong in 2021, with auction pass ins a rare occurrence. However, this year we are seeing it back as a common scenario for a property to pass in at auction, and often promptly sell to the highest bidder in negotiations afterwards. 

We want to explore what this means and how to navigate it - if you find yourself in the hot seat!

What does ‘pass in’ mean?

When a property is passed in, it means the bidding has not yet reached the vendor’s reserve price (the minimum price that they’re prepared to sell at). The vendor is opting not to sell the property for the highest bid that was achieved at auction. A property can be passed in on either a bid from the crowd or a vendor bid.

A vendor bid is a bid made by the auctioneer on behalf of the vendor. It’s not an actual bid to buy the property; rather, it’s a public statement that the seller is not happy with the amount of the last bid, and is used to keep the bidding moving forward. The auctioneer must announce that they are making a vendor bid when doing so.

If a property is passed in on a bid from a potential buyer, this person is recognised as the highest bidder and has exclusive rights to negotiate with the vendor following the auction. If an agreement is not reached, the selling agent can begin negotiations with any other interested parties.

If a property is passed in on a vendor bid, the agent can negotiate with any genuine buyers following the auction.   

If a property is passed in and a sale is unable to be negotiated with the highest bidder or other interested parties, the vendor may choose to offer the property for private sale or take it off the market. 

I'm the highest bidder, and the auction has been passed into me. What now? 

If a property has been passed in to you, the auctioneer will usually ask you to come inside to negotiate in private. The vendors will be in one room, you in another, and the agent will go back and forth negotiating the price/terms. 

Take a deep breath. Your heart’s probably still racing from bidding and now you are going into negotiations with a seasoned pro (the agent). 

This is a negotiation, and you do not need to immediately pay the first price the agent tells you is the ‘reserve’. You were the highest bidder, no one else was prepared to bid more than you did, so you are in a position of power here. 

The agent may say things like.. So obviously XYZ (the price you bid to) isn't enough to buy the house.. What's your next offer?

Whatever you do, get a figure from the agent first. Remember the quote range they advertised to the market, and make sure they’re not too far off the top of the range. 

They may inflate the vendors reserve to give them enough room to negotiate. Make sure you have a clear budget and stick to it. 

They are technically only allowed to be negotiating with you at this stage, as you were the highest bidder. So if it looks like they are talking to other buyers here feel free to call them out on it. 

Keep in mind.. Vendors are highly motivated to sell on auction day.. So this will be a good opportunity to get the property for a price you are happy with! 

What happens if my offer is accepted?

It’s important to understand that an offer accepted on auction day is subject to the same conditions as an auction sale – that is, a cooling off period does not apply. You’ll also need to pay the deposit that day.

I'm worried the property I'm going to bid at will pass in to me.. What should I do?

Call us! Yep, we have an auction day bidding service. A flat fee where you can engage us to bid and negotiate post auction if we need to. Give us a call to find out more! 

Thanks for reading. 

Tabitha