A property is passed in when bidding stops below the seller's reserve price. The highest bidder is usually invited to negotiate first, and if a contract is signed with a registered bidder on the day of the auction, there is no cooling off period, so it is as binding as buying under the hammer.
What happens when a property passes in
- The auctioneer announces the property is passed in
- The agent usually speaks first with the highest bidder
- The seller may lower the reserve, or the bidder may raise their offer
- If they agree, contracts are exchanged, often that day
- If not, the agent opens negotiations with other buyers or returns to private sale
The cooling off rule after auction
This catches buyers out. If you are a registered bidder and buy the property on the same day it was passed in, there is no cooling off period. Treat it exactly like an auction purchase: finance, inspections and the contract review all need to be done first.
If the property is sold later, after auction day, cooling off normally applies unless it is waived with a section 66W certificate.
For sellers
| Option | When it suits |
|---|---|
| Negotiate with the highest bidder | The bid was close to your reserve |
| Lower the reserve on the day | You need a sale and the market has spoken |
| Go back to private treaty | You expect a better price with more time |
| Re-auction later | Market conditions are changing |
Whatever you choose, check whether you are happy to accept a cooling off period or ask the buyer for a 66W certificate.
For buyers
If you are the highest bidder, you have the strongest position at first. But do not let the moment rush you: a contract signed after a passed-in auction is binding immediately.
Common questions
FAQs
Does the highest bidder have to buy?
No. A passed-in bid is not binding on either side.
Is there cooling off if I buy after a passed-in auction?
Not if you were a registered bidder and buy on the same day. Otherwise, usually yes.
Can the seller accept another buyer's offer?
Yes, if the highest bidder does not agree terms.
City Peak Conveyancing acts on NSW property only. This page is general information, not advice about your circumstances.