A historic Melbourne homestead has passed in $3 million under the quoted price range after concerns from local residents that buyers weren’t clear about its heritage status.

Neighbours of 18-20 Packham Crescent in Glen Waverley were vocal during the public auction on Saturday, eager to emphasise to potential bidders that the 136-year-old home could not be pulled down.

Agents had anticipated a sale price of around $5 million, which would have challenged the $5.1 million suburb house price record, set by the sale of a clinker brick on a big block at 17 Marriott Parade.

But the old farmhouse was passed in at $2 million. Negotiations with the highest bidder, who held off two other contenders, are under way.

The advertising for the home did not disclose the estate’s heritage listing. At the front of the block is a protected Norfolk pine, believed to have been planted by criminal judge Redmond Barry, who ordered the hanging of bushranger Ned Kelly.

Glen Waverley locals have formed an action group to keep a keen eye on the Packham Crescent property’s preservation, spurred by the home hitting the market.

An irregularly long settlement period of 360 days was on offer, but that was just one of many surprise aspects of the auction.

Before bidding started, a neighbour asked the Fletchers auctioneer to explain that the house was heritage listed.

The resident told Domain that he asked publicly to ensure bidders were clear that it couldn’t be demolished.

Auctioneer Kelly Sun told the crowd the site was suitable for townhouses. A neighbour – one of a dozen present – interrupted to object, and Mr Sun clarified that townhouses could be built on subdivided land.

The home was once named Plas Yollen and is much loved by locals.

Former owner Valerie Opie was pleased to see neighbours so passionate about the property’s future.

Ms Opie bought it in 1980 and raised a family there, through the decades. She said the home had a soul.

“It must have happened since we sold it, the heritage listing,” Ms Opie said.

“We didn’t get a huge amount for it when we sold, but I would have thought [the bidding] would start at $4 million, bearing in mind you have a lot of maintenance.

“We tried to preserve the old-world feeling.”

The farmhouse was built in 1880 for a Melbourne surgeon and was surrounded by orchards, which have influenced the names of nearby streets: Cherry, Pippin and Orchard.

Blackburn Road, one of Melbourne’s major eastern arterials, is understood to be named after another former owner, architect George Blackburne.

About 30 local residents have formed an action group, The Friends of Plas Yollen, following the home coming on to the market.

Neighbour Jacqueline Stone, a member of the group, said Glen Waverley has already lost a lot of history.

“It is beautiful property and in fantastic condition,” Ms Stone said.

“There are a lot of historic properties gone now, and the bits that you have left that reference the original area are more precious as a result.”

Mr Sun, when asked if there was confusion around the home’s heritage status, answered: “No, at the very beginning we told everyone about heritage overlay; we did not hide it in the section 32, during the auction I repeated that two or three times.

When asked again, he said: “There were some buyers who have a little confusing [sic], but we made that clear during the auction.”

Mr Sun said the property was special for the area, on a substantial block, and many buyers desired a large house with space for a swimming pool, tennis court or small golf course.