What to do if your property gets passed in at auction

It’s a nightmare situation as a vendor. You’ve spent weeks and thousands of dollars marketing your property, holding open homes and preparing for a sale. Then the buyers suddenly go quiet as bidding approaches the reserve.

However, if your home passes in at auction there’s no need to lose hope. Usually when this happens the property still sells – it just takes a little extra work and finesse to get the buyers over the line.

WHAT HAPPENS WHEN A PROPERTY PASSES IN AT AUCTION?

When a property is passed in at auction it means that bidders failed to reach the minimum price that the vendor is willing to sell at (the reserve price). Usually this is because the reserve is set higher than market expectations, but in some cases it can be due to a poor marketing campaign by the agent.

After the property passes in the vendor and the agent will approach the leading bidder, who usually has exclusive rights to negotiate following the unsuccessful auction. If negotiations with the lead bidder are unsuccessful then the vendor can offer the property to other auction participants or relist it for sale.

NEGOTIATING WITH BUYERS

Many properties that are passed in sell on the same day, or during the week following the auction after negotiations with bidders. It’s usually best to try to reach an agreement within three days of the auction as during this time the property will still be sold under auction conditions. That means no cooling off period and that the deposit is payable on the day an agreement is reached.

These are the keys to a successful negotiation:

• Having a plan in place with your agent.
• Reaching an agreement before the auction on the absolute lowest price you will sell for if the property is passed in.
• Hiring an agent who is an expert negotiator.
• Being realistic with your sale price and the willingness to be flexible.

The key to a successful negotiation is having the right real estate agent on your side. Make sure you pick someone you trust who has experience negotiating with buyers when auctions are passed in.

MOVING FORWARD IF YOUR PROPERTY DOESN’T SELL

If your property doesn’t sell at auction or during the negotiations following it then you need to figure out why this happened. Was your reserve price too high? Did the marketing campaign fail to create enough interest? Is the market area in a downturn?

Seek advice from multiple sources, including other real estate agents to find a way to solve a problem and sell your property.

ENSURING YOUR HOME IS NOT PASSED IN AT AUCTION

Ideally, it’s best to save yourself the extra stress of having your home passed in at auction. To give yourself the best chance of selling you should:

• Take care when hiring your real estate agent. Go for someone with local experience who knows the area you’re selling in and the buyers who may be interested.
• Be realistic with your reserve price. Know the market and understand what similar homes are selling for in your area.
• Ensure your property has an excellent multi-channel marketing campaign behind it, not just an ad in the paper or a listing online.

Auctions can be stressful so it’s always best to ensure you get a good result when the gavel strikes. However, if your property does pass in at auction, remember, it’s not the end of the world. With an expert agent by your side and a solid plan in place, there should be no reason why your property won’t sell in the days following your auction.