What happens if it passes in?

What happens if it passes in?

What happens if it passes in?


POSTED BY Ann Paterson ON 31 May 2019

People often assume that when a property passes in on auction day, it will eventually
sell for a poor price.


This is largely just a myth. We can show you recent examples of high-quality properties
across the Eastern Suburbs that passed in at auction then sold within 10-14 days for
their reserve price or even better.


If your property is correctly priced, well-presented and expertly marketed from day one,
then passing it in only means your sale is going to take a bit longer. There is no reason
for a price adjustment and we will simply keep working to achieve a great sale price for
you.


The likelihood of your property passing in increases when the market is soft and buyer
demand is lower.


For example, during the Sydney boom of 2012-2017, weekend auction clearance rates
were 70-80%, meaning up to eight out of every 10 homes that went under the hammer
sold at auction. In 2018, the market changed dramatically and by year’s end, clearance
rates were 40-50%.


Many properties that passed in were priced correctly and marketed well by the agent
but there simply wasn’t enough buyer competition to achieve a sale at auction.

The main reasons for this were the cooling market, with many buyers holding back and
waiting for prices to drop further; and severely restricted lending criteria which meant
many buyers simply couldn’t get their finance ready in time to bid at auction.


At Ann Paterson Real Estate, we know how stressful selling your home can be and we
also know how to negotiate well if your property has passed in at auction.
Here is what we’ll do if your property passes in…

  1. On auction day, it is common for buyers to approach the agent for a private
    discussion and negotiation immediately after the auction. Some people dislike buying at
    auction and won’t raise their hand unless someone else bids first.
  2. If no offers are received, we will contact the buyers who registered to bid at your
    auction to discuss why they didn’t bid or didn’t bid high enough to reach reserve.

  3. We will contact other buyers who didn’t register but showed good interest in your
    home during the campaign, to discuss why they did not register on auction day.

  4. This process will help us identify your best buyers from the current batch of
    interested parties. Currently, many buyers are telling us they need more time because
    the banks are taking much longer to approve loans, while others are waiting to sell first.

  5. After auction day, your property will be advertised as a private treaty listing,
    usually with a set asking price. We will continue to advertise it online while we follow up
    with buyers.

  6. New buyers are entering the market every week, so there is every chance we will
    have new buyer enquiry post-auction.

  7. If all buyer feedback indicates your property is not going to sell at its current
    asking price, we will discuss a price adjustment. Getting the pricing right on day one
    means we shouldn’t need to do this, unless the market has shifted during your
    campaign.

  8. We will also consider your property’s presentation. Good presentation gives
    buyers confidence in the quality of your home. New photos and a new look can re-
    engage old buyers and attract new ones.

  9. We will also consider your marketing. Online-only campaigns do not reach every
    buyer, so you might want to invest in print advertising or social media to boost
    promotion.

  10. We might consider taking your property off the market then re-launching it as a fresh listing,
    usually with some tweaks such as extra photos and opens at a different time of day.
    You can go to auction again or choose private treaty.

Many vendors worry about their properties passing in, especially in soft markets. Some
owners assume it’s better to sell via private treaty but there are still advantages to the
auction method.


The most important advantage is that it sets a timeframe for buyers. Data from Domain
Research shows auction properties sell faster than private treaties, even if they pass in
at auction and the market is soft.


A survey conducted in September 2018 showed houses in Sydney that sold post-
the auction was on the market for an average of 46 days, with apartments at 49 days.


Houses sold via private treaty averaged 68 days on the market, with apartments 70.

To find out more about buying and selling at auction, contact Ann Paterson Real Estate.