What happens if my house passes in at auction?

Passed in means the reserve was not met

Your reserve is the lowest price you will accept on auction day. If the bidding stops below it, the auctioneer passes the property in. Nothing is signed, no deposit changes hands, and you still own the house.

Passed in to a bidder, or to the vendor

If there were bids, the property is passed in to the highest bidder, and that bidder is normally given the first chance to negotiate. That conversation happens straight away, usually in a side room with you and your agent. If nobody bid at all, the property is passed in to the vendor and goes back on the market.

What happens next

• Negotiation with the highest bidder. You know exactly what they were prepared to pay in the room. The gap between that and your reserve is the conversation.
• Other buyers come back in. Underbidders, and buyers who could not bid unconditionally, can now make an offer. Some of the best offers after an auction come from people who never raised a hand.
• A price usually goes on it. Once the auction is over, you and your agent decide whether to advertise a price, invite offers, or set a new date.
• The campaign keeps running. Your agency agreement runs for its term, so the property stays listed and the agent keeps working unless you agree otherwise.

Conditions come back into play

An auction contract is unconditional. Once the property is passed in, a buyer who needs finance approved, a builder's report or a LIM can put those in an offer as conditions. That widens the group of people who can buy, and it means an accepted offer is not final until the conditions are satisfied.

It also changes how you compare offers. A lower unconditional offer and a higher conditional one are not the same thing, and the settlement date matters as much as the price if you have somewhere to be.

Reading what the auction told you

Passing in is information. It tells you what the buyers who turned up were prepared to pay on that day, which is more than you knew the week before. The question afterwards is whether the reserve, the marketing or the group of buyers being reached is what needs to change.

Ask your agent for the registered bidder numbers, the enquiry and open home numbers for your own campaign, and what the underbidders said. Decide the next price with that in front of you.