When a property fails to sell at auction in Victoria, it is said to have “passed in.” This happens when bidding does not reach the vendor's reserve price, or when there are no bids at all. For buyers, a passed-in property is often a better opportunity than winning at auction — because the legal landscape shifts dramatically in your favour.
What “passed in” means
The vendor sets a confidential reserve price before the auction. If the highest bid does not reach that figure, the auctioneer “passes in” the property — meaning it is not sold. The auctioneer may announce the property is passed in on a vendor bid (meaning no genuine bids reached the reserve) or on a genuine bid (meaning someone bid, but not enough).
According to the Real Estate Institute of Victoria, roughly 25% to 35% of Melbourne auctions result in the property being passed in, depending on market conditions. In slower markets, the figure can exceed 40%.
Who gets first negotiation rights?
If there were genuine bids, the highest bidder is typically invited to negotiate with the vendor immediately after the auction. This is an informal convention — not a legal right — but it is standard practice across Victoria. The agent will take the highest bidder to a private room to discuss terms.
If there were no genuine bids (only vendor bids), the property is effectively available to anyone. The agent will usually open negotiations with any interested parties.
The critical legal advantage: cooling-off returns
Here is the key point that many buyers miss. Once a property is passed in and you negotiate a purchase after the auction, the sale is treated as a private sale — not an auction sale. This means:
- Cooling-off period applies: Under Section 31 of the Sale of Land Act 1962, you get the standard three business day cooling-off period. This is a significant protection that auction buyers do not have.
- Conditions can be included: You can negotiate a subject-to-finance clause, subject-to-building-inspection, or any other special condition. These were not available at the auction itself.
- Deposit is negotiable: At auction, the standard is 10%. In post-auction negotiations, you may be able to agree on a lower deposit — perhaps 5% or even less.
Important exception: the buyer authority form
Some agents ask bidders to sign a “buyer authority” or “bidder registration” form before the auction. Read this form carefully. Some versions include a clause waiving the cooling-off period for post-auction negotiations. If you signed such a form, you may have already given up your cooling-off rights. Ask your solicitor to review any form before you sign it at the auction.
How to negotiate after a passed-in property
If the property passes in and you are the highest bidder, you are in a strong negotiating position. The vendor has just publicly failed to sell the property. The emotional leverage has shifted from vendor to buyer. Here is how to use it:
Do not panic-bid
The agent will try to create urgency in the negotiation room. They may say other buyers are interested, or that the vendor will re-list tomorrow. Stay calm. The vendor chose auction because they wanted a quick sale — a passed-in result is not what they planned. You have more time than the agent suggests.
Start below the reserve
If the highest bid was $780,000 and the reserve was $820,000, you do not need to jump to $820,000. Offer $790,000 or $795,000 and negotiate from there. The vendor may accept a figure below the reserve rather than face the cost and uncertainty of relisting.
Include conditions in your offer
This is your chance to add protections that were not available at auction. Consider including:
- Subject-to-finance with a 14 to 21 day approval period
- Subject-to-a-satisfactory-building-inspection within 7 to 14 days
- A longer settlement period (60 or 90 days instead of 30)
- A reduced deposit — perhaps 5% ($39,000 on a $780,000 property) instead of 10% ($78,000)
Get the contract reviewed before signing
Even if the agent pressures you to sign that evening, you are under no legal obligation to do so. Take the contract home, have your solicitor review it, and respond the next business day. The property has already failed to sell — it is unlikely to sell to someone else in the next 12 hours.
What happens if you do not negotiate on the day?
If you leave without reaching an agreement, the property becomes available to all buyers. The agent will typically list it as a private sale (sometimes labelled “auction result” or “passed in”) on the major portals. You can still make an offer, but you lose the exclusivity of being first in line.
Many passed-in properties sell within one to two weeks of the auction for a price at or slightly below the reserve. If you missed out on auction day, monitor the listing and make a timely offer. You will still have cooling-off rights and the ability to include conditions.
The bottom line
A passed-in property is not a failure for the buyer — it is an opportunity. You regain your cooling-off rights, your ability to add conditions, and genuine negotiation leverage. The vendor wanted a quick, unconditional auction sale and did not get one. Use that position wisely: negotiate calmly, include your protections, and get the contract reviewed before you sign.
For a detailed guide on the negotiation process and how to use contract findings to strengthen your position, see our dedicated guide.
Ready to check your contract? Upload your Section 32 or Contract of Sale at precontractreview.com for a pre-contract check — typically in just a few minutes.