Five Things to Research Before Making an Offer on a Melbourne Property

Here is a number that should bother every buyer in Melbourne: 74% of properties in this city sell below the vendor's asking price. The median gap is roughly $24,000 1.

That means three out of four sellers leave room to negotiate. And yet most buyers — particularly first-timers — do not negotiate at all. They see the listing price, they feel the urgency, and they either offer at or above the asking figure because they are terrified of missing out.

I have been on both sides of hundreds of these transactions. As a buyer's agent across 350-plus Melbourne acquisitions, I can tell you with absolute certainty: the buyer who wins is almost never the one with the biggest budget. It is the one with the best information.

Information is what turns a negotiation from an emotional guessing game into a mathematical exercise. And mathematics, unlike emotions, tends to work in the buyer's favour.

Step 1: Find out who owns the property and why they are selling

Before I think about price, I need to understand the human being on the other side of the transaction. The seller's circumstances determine everything about how flexible they will be.

An elderly couple who bought the house forty years ago for $85,000 and are now selling for $750,000 is sitting on $665,000 of profit. They can afford to negotiate $30,000 without feeling any pain whatsoever. Contrast that with a young investor who bought two years ago at $720,000 with a 90% loan — they may owe $648,000 and have very little room to move. They cannot drop below what they owe without bringing cash to the settlement table 2.

How do you find this out? Some of it is public. The property's sales history is available through LANDATA in Victoria. You can see when the current owner purchased and at what price. Council rates notices list the site value and capital improved value. Any competent conveyancer can pull the title search for you before you make an offer.

The reason for selling is harder to determine, but not impossible. Listen during open inspections. Look for clues in the listing — phrases like "estate sale," "deceased estate," or "vendor committed elsewhere" all signal different levels of urgency. A divorce or probate sale will typically have tighter timelines and more willingness to accept a lower offer for a quick, clean settlement.

One thing I have learned: never ask the selling agent directly why the vendor is selling. They will give you a sanitised answer designed to strengthen their position. Instead, research independently and let the facts speak.

Step 2: Calculate the true land value

Every property in Victoria has a site value assessed by the council for rating purposes. This number tells you what the land alone is worth, without the building.

You can find it on your council rates notice if you already own property in the area, or you can look it up through the LANDATA platform maintained by Land Use Victoria. The cost is modest — around $30 for a basic property report 3.

Once you have the site value, do this calculation: subtract the site value from the listing price. The remainder is what you are being asked to pay for the building.

If a property is listed at $800,000 and the site value is $620,000, you are paying $180,000 for the building. Is the building worth $180,000? If it is a 1970s weatherboard that needs $40,000 of work, probably not. That tells you the listing price has room to come down.

Conversely, if the site value is $750,000, you are only paying $50,000 for the building. That is a land-heavy purchase — exactly the profile we target — and the asking price may be reasonable or even cheap 4.

This calculation takes ten minutes and gives you an objective anchor for your offer. Without it, you are guessing. And guessing, in property negotiations, is expensive.

Step 3: Pull comparable sales data

Comparable sales — what the industry calls "comps" — are the foundation of any rational offer. You need to know what similar properties in the same area have actually sold for in the past three to six months.

In Victoria, Consumer Affairs provides free street-level sales data. You can also use platforms that aggregate recent sales and update frequently. The key is to focus on genuinely comparable properties: same suburb, similar block size, similar dwelling type, sold within the last six months 5.

Here is where most buyers go wrong: they compare their target property to the best recent sale in the suburb. "Oh, a house on Smith Street sold for $820,000 last month, so this one at $790,000 is a bargain!" But the Smith Street house might have been renovated, or on a bigger block, or in a better position within the suburb.

I compare to the median of comparable sales, not the best. If five similar houses in the area sold for $720K, $745K, $760K, $780K, and $820K in the past six months, my anchor price is $760K (the median), not $820K. My starting offer would be 3-5% below that median, with room to negotiate up based on any specific advantages the target property has over the comparable set.

The data also reveals another useful pattern: how long comparable properties took to sell. If everything in the area is selling within two weeks of listing, the market is hot and vendor discounts will be smaller. If similar properties are sitting for 60-plus days, sellers are anxious and negotiation room opens up considerably.

Step 4: Read the agent, not just the listing

Selling agents are not your enemy, but they are not your friend either. They work for the vendor. Their job is to extract the maximum price from you. Understanding their tactics and incentives will save you real money.

Here is an example from a recent inspection I attended. The property was listed for auction. There was a date on the auction board outside. But I noticed a sticker had been placed over the original date — the auction had been postponed by one week.

That small detail told me something important. The agent had changed the auction date, and the vendor had agreed. This meant the agent had significant influence over the vendor's decisions. It also suggested the original date was not generating enough buyer interest to justify proceeding 6.

We used this. As it happened, a nearby property had just passed in at auction — failed to sell. We immediately contacted the agent and said: "The property next door just passed in. We are considering both. We would like to make a pre-auction offer."

The auction was cancelled. We negotiated a private sale at a price below what the property would likely have achieved under competitive bidding.

A few things I always watch for during inspections:

• How many groups attend the open. If the agent has a sign-in sheet, glance at it. Five groups is very different from thirty.
• Whether the agent is answering the phone during the open. If they are busy fielding calls, there is genuine interest.
• Whether anyone else asks for the Section 32 contract. This signals serious intent.
• How the agent talks about the vendor. Agents who say "the vendor is very motivated" are telling you the vendor will accept less. Agents who say "the vendor has very clear price expectations" are telling you not to waste time with low offers.

None of this is about manipulation. It is about paying attention.

When to negotiate privately versus competing at auction

Not every property in Melbourne goes to private sale. In fact, auction clearance rates in Melbourne have historically been the highest of any Australian city, with 60% to 70% of properties in some suburbs sold under the hammer during strong markets 7.

But here is something most buyers do not realise: even properties listed for auction can often be purchased privately before auction day. The trick is knowing when a vendor will entertain a pre-auction offer, and making that offer at the right moment.

Vendors are most receptive to pre-auction offers in three situations:

First, when open inspection attendance is low. If the agent is not generating the crowd they promised, the vendor starts worrying about a pass-in on auction day. A solid pre-auction offer removes that risk.

Second, when a comparable property nearby fails at auction. This is exactly what happened in the case I described earlier — a neighbouring property passed in, and we immediately used that as evidence to support a private offer. The vendor's confidence in achieving a strong auction result evaporated, and they accepted our offer to eliminate the uncertainty.

Third, when the vendor has already purchased their next property. Settlement dates create pressure. A vendor who has already committed to buying their next home needs certainty of sale more than they need the last $10,000 of price. An unconditional pre-auction offer with a settlement date that aligns with their purchase timeline is extremely attractive.

Conversely, auction can actually work in a buyer's favour in certain conditions. If the property has a narrow buyer pool — perhaps it is on a busy road, or needs significant renovation, or has an unusual layout — auction can produce a thin crowd and a below-estimate result. I have purchased properties at auction for 5% to 10% below the vendor's reserve when only two or three bidders showed up.

The key insight is this: the sale method (auction or private) is not fixed. It is a variable you can influence. If you have done your research and the data supports a private offer, make it before auction day. The worst that can happen is the vendor says no, and you still get to bid at the auction.

Step 5: Set your offer range with mathematics, not emotions

After completing steps one through four, you should have enough information to set a rational offer range. Here is how I build it.

Start with the median of comparable sales. Adjust upward or downward based on the target property's specific attributes compared to the comps (block size, building condition, position, aspect). Apply the average vendor discount for the suburb — in Melbourne overall, private sale discounts average around 3%, but this varies significantly by area and market conditions 7.

The resulting number is your starting offer. Your maximum is the highest price at which the property still generates acceptable returns based on your investment criteria.

For our clients, the investment criteria are specific: minimum 80% land-to-total-value ratio, minimum 5% gross rental yield achievable through renovation, and positive cash flow at current interest rates plus a 200-basis-point buffer 8.

If the property does not meet these criteria at the vendor's asking price, we calculate the price at which it would meet them. That becomes our maximum. We do not go above it, regardless of how many other buyers are circling.

This sounds cold. It is. But cold mathematics has saved our clients an average of $30,000 to $80,000 per acquisition compared to the original asking price. Across 350-plus transactions, that adds up to millions of dollars that stayed in our clients' pockets rather than being transferred to vendors because of emotional decision-making.

The three most expensive mistakes I see at the negotiation table:

Mistake 1: Talking too much. The person asking questions controls the negotiation. The person answering questions reveals information. Every piece of information you reveal — your maximum budget, your emotional attachment to the property, your deadline — gives the agent ammunition to extract more money from you.

Mistake 2: Getting emotionally attached before doing the numbers. Research shows that 58% of buyers in competitive situations feel pressured to exceed their budget 9. The agent's entire strategy relies on creating emotional urgency. The antidote is simple: do your research before the first inspection, not after.

Mistake 3: Revealing your pre-approval amount. Your pre-approval is your maximum lending capacity. It is not your budget. If you tell the agent you are pre-approved for $900,000, they will work to get you as close to $900,000 as possible. Keep your pre-approval private. Discuss your offer, not your capacity.

Frequently asked questions

What is a reasonable first offer below asking price? For Melbourne private sales, a first offer 5% to 8% below asking is generally taken seriously. Offers more than 10% below asking in a normal market are usually ignored. However, if the property has been listed for more than 60 days, deeper discounts are possible. Check the listing date and adjust accordingly.

Should I make a conditional or unconditional offer? Conditional offers (subject to finance, building inspection) are standard and appropriate for most buyers. However, an unconditional offer — if you have the financial capacity and have already done your due diligence — is a powerful negotiation tool. Vendors strongly prefer certainty. An unconditional offer at $740K will often beat a conditional offer at $760K because it eliminates the risk of the deal collapsing 10.

How do I find off-market properties? Build relationships with selling agents in your target suburbs. The best off-market deals go to buyers who agents know can settle quickly and without drama. A buyer's agent with an established network typically has access to properties that never reach the public portals. Over 30% of our acquisitions are sourced through off-market channels.

Is it worth hiring a buyer's agent for negotiation? A buyer's agent typically saves $30,000 to $80,000 per transaction through professional negotiation. The service fee is usually a fraction of that saving. The real value is not just the price negotiation — it is the due diligence that prevents you from overpaying for a property with hidden problems that would cost more to fix than the discount you received.