What happens when a home is passed in at auction?
With around 300–400 homes being passed in at auction every week this spring, it is important to discuss what happens next for the vendor and the buyer.
Firstly, just because the buyers were unable to meet the vendor’s expectations in the course of the auction, does not mean that the home won’t be sold to one of the interested bidders. The law in Victoria provides the highest bidder with an important advantage: if the property is passed in, the owner – through the agent or auctioneer – will first negotiate with the highest bidder for the purchase of the property.
So if you have participated in the bidding or have been sitting back watching how it is progressing and the auctioneer announces the property is going to be passed in, it is a good strategy at this point to make sure you are the highest bidder – to secure the option to negotiate with the vendor.
Once the property’s passed in, it is too late. The auctioneer can’t re-open the auction to accommodate a late bid and override the right someone else has secured ahead of you.
How long do you have to negotiate with the vendor? This may well depend on whether you are prepared to accept the vendor’s price; if you are not prepared to meet the owner’s asking price, the vendor may end negotiations with you immediately and start negotiating with another interested party.
If a negotiation after the home has been passed in fails to result in the right price, then most homes will remain on the market for private sale.