What happens when a property passes in?
A common misconception is that there is something wrong with the property itself, or that it is in some way difficult to sell. This is however not usually the case.
A natural fear among homeowners who are approaching their home’s impending auction is that they could experience their property passing in.
There are many reasons why a property passes in. In spite of a meticulously planned, strategised and executed campaign, there will always be circumstances in which a property may not sell.
A common misconception is that there is something wrong with the property itself, or that it is in some way difficult to sell. This is however not usually the case. A good agent will have proven processes in place to ensure a successful sale regardless of what happens on auction day.
Another myth is that a property will sell for less than it could have achieved had it sold at auction. Often we experience homes to go on and sell for great outcome in the hours or days following the scheduled auction.
Selling after the auction has taken place, or after experiencing a property passing in is quite normal and is occurring more regularly in the current market. Implementing a considered contingency plan can produce just as positive an outcome, in some instances even more so.
A property passes in when active bidding levels fail to reach the homeowner’s set reserve price. If the reserve price is not reached, the owner is not obligated to sell.
After a property passes in the agent will negotiate with the highest bidder, followed by other bidders present and often these conversations result in a successful sale. Even if there were no bids, there may be parties present in the crowd who had come prepared to bid but failed to do so, due to factors such as the absence of any other active bidders. This post auction negotiation process occurs far more often than sellers may realise.
For homes not sold in this way, the agent handling the sale will work with the client, evaluate all available options, review the campaign to date and agree on an action plan moving forward.
In spite of a meticulously planned, strategised and executed campaign, there will always be circumstances in which a property may not sell.
There is a clear perception and trend amongst both buyers and agents that a property will sell very soon after the auction date, often within a 14 day period. If a property did indeed pass in at auction, the sense of urgency that immediately follows can be heightened for all parties.
‘It’s important to understand that a property passing in does not mean the market has dismissed the residence or that the auction failed. Sometimes an auction draws a buyer out of the woodwork by putting a finite time on the sale process,’ says James Tomlinson, Marshall White sales executive and auctioneer.
In the minutes immediately following a property passing in at auction, a Marshall White agent will report back details of the available property to the results team who notifies all Marshall White agents. This enables all agents to take immediate action and make new buyers aware of the property’s availability.
‘Recently I sold a property at auction where there were two main bidders,’ says James. ‘I received a notification that a property in the immediate vicinity had passed in so I was able to send the underbidder directly to that property to consider making an offer.’
The next step could be to put the property onto the open market for sale by private treaty with a price guide. This will uncover a new selection of potential purchasers as new buyers enter the market every day and some individuals may be more willing to engage after seeing how the market has valued a property.
Sometimes the market goes through periods when homes sell under the hammer more readily and at other times post auction negotiations are more common. After a property passes in, when an agent works closely with their vendor, it’s highly likely a successful sale will be realised.