The auction process in Australia is a high-stakes environment, filled with tension and anticipation. Despite the competitive atmosphere, not all properties find their new owners on auction day. When a property “passes in,” it opens a different avenue for negotiation, altering the dynamics between buyers and sellers.

What Happens When a Property Passes In?

When a property is ‘passed in’ at auction, it means that the highest bid did not meet the seller’s reserve price, the minimum price the seller is willing to accept. This situation often leads to a mixed bag of emotions and a significant shift in negotiating dynamics. Sellers may feel disappointment or anxiety about the property’s market value, while buyers might see it as an opportunity to negotiate a purchase more aligned with their valuation of the property. This shift often moves the advantage to the buyer, who can leverage the situation to negotiate directly with the seller through their agents.

Preparing for Negotiation

Effective Negotiation Tips

  1. Due Diligence is Key: Before entering any auction, arm yourself with as much information as possible about the property. Conduct thorough due diligence to understand its condition, potential issues, and any encumbrances that may affect its value.

  2. Know the Market Value: Researching the market value of similar properties in the area gives you a solid foundation for any negotiation. It ensures that your offer is competitive but also within the bounds of what is reasonable and fair.

  3. Set Your Budget: Knowing your financial limits is crucial. Determine your maximum offer based on your budget and stick to it. This prevents getting caught in the heat of negotiation and committing to a price you cannot afford.

  4. Emotional Detachment: Stay objective and avoid emotional attachment to the property. Making decisions based on emotions rather than rational assessment can lead to overpaying or overlooking significant issues.

  5. Rational Decision Making: Always base your decisions on the information at hand, your due diligence, and logical reasoning. If the numbers or conditions do not add up, be prepared to walk away.

How Long Do I Have to Negotiate After a Property Passes In?

The negotiation window after a property passes in can vary. In many cases, the agent will seek to initiate negotiations immediately with the highest bidder to secure a sale on auction day. However, if an agreement cannot be reached, the property may officially go on the market as a private sale. At this point, the negotiation timeline can extend indefinitely, but acting swiftly while the interest of both parties is high can often lead to a successful outcome.

What to Do During Post-Auction Negotiation

Initiating talks with the seller or their agent requires a strategic approach:

  1. Initiating Negotiations: Express your interest to the seller’s agent promptly. Demonstrating serious intent and readiness to proceed can set a positive tone for negotiations.

  2. Making Your Offer: Present an offer that’s competitive yet stays within your budget. Justify your offer with market data and the insights gathered during your due diligence.

  3. Communication Techniques: Employ clear, concise communication. Be prepared to make concessions but also know what aspects of the deal are non-negotiable for you. Finding common ground is the goal.

Don’t wait until the last minute.

Get your finance pre-approved with the help of Will Bell Mortgage Broker, ensuring you’re ready to make a strong offer when the right property comes along.

Legal and Financial Considerations

  • Finance Pre-Approval: Having finance pre-approved signals to the seller your readiness and ability to proceed with the purchase. It can significantly impact the seller’s willingness to negotiate favorably.

  • Role of Conveyancers: Engage a conveyancer or legal representative early in the process. They play a crucial role in reviewing the terms of the sale, advising on legal implications, and ensuring that the contract reflects the agreed terms.

  • Review of Documents: Preparation and review of legal and financial documents are critical. This includes the contract of sale, loan documents, and any other relevant paperwork. Your conveyancer will ensure these documents protect your interests

Common Mistakes to Avoid in Negotiations

  • Overbidding Due to Emotional Investment: Allowing emotions to drive your bidding can lead to offering more than the property’s worth or more than you can afford. It’s essential to keep a cool head and stick to your pre-determined budget, ensuring that your decisions are grounded in financial prudence rather than emotional reactions.

  • Lack of Clear Financial Boundaries: Entering negotiations without a firm understanding of your financial limits is a recipe for trouble. It’s vital to have a clear picture of how much you can afford, taking into account all associated costs, not just the purchase price. Failing to do so can lead to financial strain or even losing the property if you’re unable to meet the financial commitments.

  • Underestimating the Need for Swift Action and Decisiveness: When a property is passed in, time is of the essence. Hesitating to express interest or dragging your feet during negotiations can result in missing out on the property. Sellers are often eager to conclude the sale swiftly after an auction, so being prepared to act decisively and communicate your interest and offers clearly can give you a competitive edge.

How Can a Mortgage Broker Assist in the Post-Auction Negotiation Process?

A mortgage broker plays a pivotal role in ensuring you are financially prepared to make a compelling offer. They can:

  • Provide insight into your borrowing capacity and secure finance pre-approval.
  • Offer advice on market trends and property values to inform your bidding strategy.
  • Assist in swiftly arranging the necessary financial documentation, enhancing your credibility as a serious buyer.


Negotiating after an auction offers a unique pathway for potential buyers to secure a property, often at terms more favorable than the heated atmosphere of bidding wars allows. With the right preparation, understanding of the market, and strategic approach, you can enter post-auction negotiations with confidence. Remember, patience and persistence are your allies in turning an initially passed-in property into your new home or investment.

Frequently Asked Questions About Negotiating After an Auction

Express your interest to the selling agent immediately, and demonstrate your readiness by discussing your offer and showing evidence of finance pre-approval.

Yes, once a property passes in, the reserve price can be a starting point for negotiations, and both parties may be more flexible regarding the price.

Securing a property that has passed in can allow for more favorable negotiation on price, terms, and conditions, potentially making it a better deal for the buyer.

After winning an auction, a deposit (usually 10% of the purchase price) is paid on the day, with the remainder due at settlement.

Be clear about your terms, back up your offer with market research and pre-approval documents, and remain open yet firm in your negotiations.

You’ll sign the contract and pay the deposit, then move towards settlement, during which legal and financial preparations are completed.

In a first-price auction, the highest bidder wins the item at the price they bid, requiring payment of the deposit immediately after the auction.

A deposit is a percentage of the total purchase price, typically 10%, paid by the buyer to secure the property immediately after the auction.

After winning, you sign the contract, pay the required deposit, and begin the process leading to the settlement of the property.

Disclaimer: The content of this article is general in nature and is presented for informative purposes. It is not intended to constitute tax or financial advice, whether general or personal nor is it intended to imply any recommendation or opinion about a financial product. It does not take into consideration your personal situation and may not be relevant to circumstances. Before taking any action, consider your own particular circumstances and seek professional advice. This content is protected by copyright laws and various other intellectual property laws. It is not to be modified, reproduced or republished without prior written consent.


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