Definition
Passed In is a term used in property auctions to describe a situation where the highest bid fails to reach the seller’s reserve price, meaning the property is not sold during the auction. When this occurs, the auctioneer declares the property “passed in,” and the auction concludes without a successful sale.
In New South Wales auctions, a property being passed in does not mean the property is withdrawn from the market permanently. Instead, it usually signals that the seller and interested buyers may move into post-auction negotiations to try and reach an acceptable sale price.
Where the Term Is Used
The term passed in is used specifically in the context of real estate auctions in New South Wales.
Common situations where this occurs include:
Residential Property Auctions
If bidding during the auction does not reach the seller’s reserve price, the auctioneer may pass the property in.
Changing Market Conditions
Properties may be passed in when buyer demand is weaker than expected or when bidders are unwilling to reach the seller’s reserve price.
Investment Property Auctions
Investors may intentionally stop bidding below the reserve price in hopes of negotiating privately after the auction.
High Reserve Price Situations
If the reserve price is set above the level buyers are prepared to pay on the day, the property may be passed in.
What Happens When a Property Is Passed In
When a property is passed in, the auctioneer usually announces the highest bid received during the auction. In most NSW auctions, the highest registered bidder is then given the first opportunity to negotiate with the seller.
This process typically includes:
Private Negotiation
The highest bidder may be invited to negotiate directly with the seller through the agent.