As capital city residential listings increase for spring, pass-ins at house auctions are becoming a common occurrence.
A pass-in is a situation wherein the highest bid does not match the vendor’s expectations. Negotiations with the agent begin right after the property is passed in to the top bidder.
The other bidders will also be discussing their interest on the property with other agents. In case the sale does not happen with the top bidder, the ‘underbidders’ get their chance to negotiate for the property.
According to Metropole Property Strategists’ Bryce Yardney in an interview with Domain News, the golden rule for top bidders is not to follow the agent inside the house.
“I prefer to stand outside where I can assess whether there is any real competition or just friends who are pretending to be buyers hanging around,” said Yardney.
Yardney explained that agents have the perception that other bidders are waiting for their turn to pressure buyers to give in to the seller’s price. He encouraged top bidders to find out what is the lowest price the vendor is willing to sell the property for. The highest bidder should also be willing to increase his offer for the property.
“You need to take a medium-term view on the price because five years down the track the extra $5000 or $10,000 you might pay does not seem that much,” said Domain Group chief economist Andrew Wilson.
Wilson explained that top bidders needed leeway for negotiations after a house goes under the hammer. It is advised that buyers also determine the agenda of the seller and what the seller’s expenses were prior to the auction.
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