Home Property & You What Does “Passed In” Mean at an Auction?

What Does “Passed In” Mean at an Auction?

What Does Passed In Mean?
What Does Passed In Mean?

Have you ever wondered what it means when a property is “passed in” at an auction? If you’re new to the real estate game, this term may be unfamiliar to you. Essentially, “passed in” means that the highest bid at the auction did not meet the reserve price set by the vendor. This means that the property did not sell through the auction process. As a result,the highest bidder may have the opportunity to negotiate with the seller or their real estate agent in private.

When a property is “passed in,” it can be a disappointment for both the seller and the potential buyers. However, it’s important to remember that it’s not the end of the road. In fact, passing in at auction can often be a blessing in disguise. It provides an opportunity for negotiations to take place and for a private sale to generate the best sale price for all parties involved. So, if you’re involved in an auction where the property is passed in, don’t despair. There may still be a chance to secure the property through private negotiations.


Property Auction Terms – What Does Passed In Mean?

If you’re new to the world of auctions, it can be daunting to navigate the various terms and rules that come with it. Here’s a breakdown of some of the most important auction terms you need to know.

Pass In

When a property “passes in” at auction, it means that the highest bid didn’t meet the seller’s reserve price. As a result, the property wasn’t sold at auction. However, the highest bidder may still have the opportunity to negotiate with the seller or their real estate agent in private.

It’s crucial to understand that when a property passes in, it doesn’t mean that the property is worth the lower price that was the top bid. The seller’s reserve price is usually set based on the best advice of their selling agent. Furthermore, it reflects the seller’s expectations for the property. If the vendor’s reserve price isn’t met, the property may be passed in. However, this doesn’t necessarily mean that the seller will accept a lower price.

Reserve Price

The reserve price is the minimum price that the seller is willing to accept for the property being auctioned. If the highest bid doesn’t meet this price, the property won’t be sold at auction and will be “passed in”.

Vendor Bid

A vendor bid is a bid made by the seller or the vendor’s agent on the property being auctioned. This is usually done to encourage other bidders to increase their bids. In some states, there are auction rules around when and how vendor bids can be made.

Auction language and rules can vary from state to state. Therefore you need to do your research and understand the specific rules that apply to your auction. For example, there is no cooling-off period in most Asutralian states and territies for any property purchases at an auction. Remember, both buyers and sellers are expected to act in good faith during the auction process. They are also expected to abide by the strict rules set out by the auctioneer.


The Auction Process

If you’re considering buying or selling a property at auction, it’s important to understand the auction process. Here are some key things to keep in mind:

Bidding Strategy

Before the day of the auction, it’s important to have a bidding strategy in place. This means setting a maximum bid that you’re comfortable with and sticking to it. It’s also a good idea to attend a few auctions beforehand to get a feel for the bidding process and the auctioneer’s style.

Auctioneer’s Role

The auctioneer’s role is to facilitate the bidding process and ensure that the auction runs smoothly. They will start the bidding at a certain price and continue to take bids until the highest bidder is determined.

On the Market Announcement

Once the bidding reaches the reserve price (the minimum price the seller is willing to accept), the auctioneer will make an “on the market” announcement. This means that the property is guaranteed to sell and the highest bidder will be the successful buyer.

During the auction, the auctioneer will also provide as much information about the property, such as its features and value. It’s important to listen carefully to this information and take it into consideration when deciding on your bidding strategy.

The auction process can be an exciting and high-energy experience. When you understand the rules and have a clear bidding strategy in place, you can increase your chances of being the successful bidder and securing the property you want. Remember to also seek the sales agents’ expert advice and have a well-planned sales campaign to achieve the best price.


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What Happens When a Property Is Passed In

When a property is passed in at an auction, it means that the highest bid did not meet the reserve price set by the seller. This does not necessarily mean that the property will not be sold. There are a few options available to the seller and the highest bidder after a property passes in.

Negotiation After Pass In

After a property passes in, the highest bidder may have the opportunity to negotiate with the seller or their real estate agent in private. This can be a good opportunity for the buyer to secure the property at a price that is acceptable to both parties. It’s always useful for the buyer to know the vendor’s lowest price and not just the reserve price, as these are not always the same. One tip I have used in the past is to ask the agent for the reserve price and then express amazement at how high it is. This has often led to a lower price being offered.

Potential Re-Auction

If the negotiations are unsuccessful, the seller may choose to re-auction the property. This can be a good option if the seller believes that they can achieve a better price at a later date or if they have made changes to the property that they believe will increase its value. However, re-auctioning a property can be expensive and time-consuming, so it is not always the best option.

When a property passes in, it is not the end of the world for either the buyer or the seller. There are options available for both parties to achieve a successful sale. Both parties need to be open to negotiations and to communicate effectively to ensure that a mutually beneficial outcome is achieved.


Buyer Considerations

If you’re a buyer and the property you’re interested in passes in at auction, you may have the opportunity to negotiate with the seller or their real estate agent in private. Here are some things to consider when making an offer:

Understanding Market Value

Have a good understanding of the market value of the property you’re interested in. Research similar properties in the area that have recently sold and compare their prices. This will give you an idea of what a fair price for the property might be.

Budgeting and Offers

Before making an offer, consider your budget and how much you’re willing to spend. Keep in mind that the property market can be unpredictable, and prices can fluctuate based on market conditions. It’s also a good idea to have a great contingency plan in case the property doesn’t meet your expectations.

When making an offer, be realistic and make an offer that reflects the current open market conditions and the property’s value. Don’t be afraid to negotiate. However, keep in mind that the seller may have specific issues that they need to address before accepting an offer.

The most important aspects of buying a property are to do your research. Be patient and make an offer that reflects the value of the property. By keeping these factors in mind, you’ll have a better chance of finding the right property at the right price, even if the property passes in at auction.


Post-Auction Possibilities

After the auction ends, there are still several options available to you. Here are some things you can do if your property has passed in at auction.

Private Sale Opportunities

If your property has passed in at auction, you can still sell it through a private sale. This means that you will negotiate with prospective buyers directly, rather than going through an auction. Private sales can be a good option if you have a keen buyer or if there are interested parties who were unable to attend the auction. You can also use a buyer’s agent to help you find potential buyers.

Contract and Legal Aspects

After the auction, you will still need to consider the contract of sale and other legal aspects of the sale. You should speak to your estate agent or real estate agent to get expert help with these matters. They helps you negotiate with potential buyers and ensures that the contract of sale is fair and legally binding.

During the negotiation process, keep in mind the minimum price that you are willing to accept for the property. This will be the starting point for any negotiations with potential buyers. You should also be aware of any interested party who was unable to attend the auction and consider whether they might be willing to make an offer.

Private negotiations can be a useful way to sell your property after it has passed in at auction. You can negotiate with potential buyers in a more relaxed setting and provide them with useful information about the property. This can help you to achieve the right price for your property and may even lead to a great deal.

Overall, there are many post-auction possibilities available to you if your property has passed in at auction. You can still sell your property through a private sale. Negotiate with potential buyers and ensure that the contract of sale is fair and legally binding. With the right approach, you can achieve a great sale and get the right price for your property.


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