Passed in at auction explained — what it means and what to do next in NSW and Victoria

The short version

A property is passed in when the bidding at auction doesn't reach the seller's reserve price — the lowest figure they're willing to accept. The property doesn't sell under the hammer. Instead, the highest genuine bidder is usually offered the first chance to negotiate privately with the seller, there and then. If you agree on a price, you sign the same auction contract you'd have signed had you won under the hammer.

The trap is assuming a passed-in property comes with a cooling-off period. Depending on when and how the sale is struck, an auction-related exclusion can still apply — so don't count on a window to sort out finance or change your mind afterwards.

Why a property passes in

The seller sets a reserve, usually kept confidential, and the property only sells under the hammer once bidding clears it — the point where the auctioneer declares it "on the market". If the top bid stays below the reserve, the auctioneer can't sell, so the property is passed in. It can also be passed in to the vendor if the last bid was a vendor bid — the seller's own declared bid — rather than a genuine buyer's bid. A property passing in isn't a sign nobody wanted it; it usually just means the reserve sat above what the room was prepared to pay on the day.

First right to negotiate

When a property is passed in, the agent normally takes the highest genuine bidder aside first. That first right to negotiate is one of the real advantages of bidding rather than hanging back — even a bid you thought was too low can put you at the front of the queue. This is also the moment the seller's reserve often comes into view: the agent may reveal it, or float a figure, to see whether the gap can be bridged. If you can't agree, the seller is free to open negotiations with other bidders, re-list the property for private sale, or take it to auction again another day.

The cooling-off trap

This is the part that catches buyers out. Buying under the hammer never carries a cooling-off period. But a sale negotiated after a property passes in is often treated the same way, because it happens in the orbit of the auction.

In NSW, there is no cooling-off period on a sale by auction, and that exclusion generally extends to a property passed in and then sold to a bidder on the same day — the exception commonly runs for the two business days after the auction. In Victoria, the three-day cooling-off period doesn't apply to a sale made within three clear business days before or after a publicly advertised auction, under the Sale of Land Act 1962 (Vic). Whether an exclusion bites turns on the exact timing and facts, so confirm your position with a conveyancer before you sign — don't assume passing in has handed you an exit.

Negotiating after the hammer stops

A passed-in negotiation feels calmer than the auction floor, but it's still a negotiation under pressure, with the agent working for the seller. A few things worth holding onto:

• The reserve is the seller's opening position, not a fixed price. Passing in tells you the room wouldn't go there today, which is information you can use.
• Your bidding limit doesn't change because the setting did. The number you set before the auction is still your number.
• If you agree a price, you're signing the auction contract as it stands. Anything you'd want amended — settlement length, penalty interest, a vendor-favourable special condition — has to be raised now, and the seller doesn't have to agree.

What to check before you sign

1. Confirm whether cooling-off is excluded. Ask your conveyancer whether the post-auction timing means the sale carries no cooling-off — assume it doesn't until you're told otherwise.
2. Have unconditional finance ready. Not a pre-approval letter — a lender's confirmed approval on this property. If cooling-off is excluded, there's no window to arrange it afterwards.
3. Read the contract before auction day, not after. The passed-in contract is the auction contract. If you didn't have it reviewed beforehand, you're negotiating blind — our auction contracts guide shows where the risk hides.
4. Get building, pest and any strata reports done in advance. There's no condition to fall back on once you sign.
5. Don't let "first right" rush you. First right to negotiate is a privilege, not a deadline measured in seconds. It's better to lose a property than to sign a contract you haven't understood.

Common questions

Does passing in mean I've got a cooling-off period?

Not reliably. A sale struck soon after an auction can fall within the same cooling-off exclusions that apply to buying under the hammer, in both NSW and Victoria. Treat it as unconditional and binding on signing unless your conveyancer confirms otherwise.

Can the seller sell to someone else after passing in?

Yes. Your first right to negotiate is a chance, not a lock on the property. If you can't agree, the seller can turn to other bidders or re-list it. Until contracts are exchanged, a higher offer from someone else can still win the property out from under you.

Will the agent tell me the reserve once it passes in?

Often, yes — revealing the reserve is how the agent tries to bridge the gap and get the deal done. But the reserve is the seller's number to move, and nothing obliges you to meet it. If the reserve sits well above your limit, walking away is a legitimate outcome, not a failure.