There are many terms used in real estate and as we head into the spring selling season it is timely to explain three of the terms that are used in auctions, passed in, passed in on a vendors bid and the reserve price.
Passed in
Around 30 per cent of properties auctioned on any given weekend this year have been passed in. This occurs when the highest bid at the auction does not meet the vendors’ reserve price.
Passed in on vendors bid
Some auctions that are passed in are passed in on a vendors bid. This means that the last bid was made by the vendor or the agent on the vendors’ behalf. This shows that demand at the auction has fallen short of the vendor’s expectations. This year the proportion of auctions passed in on vendors bid is around 13-15 per cent.
Reserve price
At the ‘heart’ of the auction process is the reserve price. The reserve price is the minimum price that the vendor wants for their property. The reserve is typically set by the vendor the day of, or the day before the auction. There is no requirement for the vendor to set a particular price or have regard to what similar properties have sold for; it is simply the price that they would like to receive for their property. It is also worth noting that whilst it is often announced, there is no requirement for the auctioneer to announce that the reserve has been met during the auction.
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Tags: Auction, auction terms, auctioneer, auctions, cent, heart, property, proportion, requirement, Vendor
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