Making an offer
Setting your maximum price and walk-away limit
Total acquisition budget, maximum contract price and walk-away number are three different figures — a worked worksheet for telling them apart.
- Total acquisition budget is your complete cash-and-debt ceiling, including duty, legal costs, inspections, fees and buffers — not just the contract price.
- Maximum contract price is what's left for the price itself once those costs are subtracted — and duty itself depends on the price, so this needs a short calculation.
- Walk-away number is the price you'll actually offer or bid — often set below the technical maximum to reflect comparable-sales uncertainty or defects found.
- A buyer may rationally set a walk-away price below both their lender's maximum and the top of their estimated value range.
Three figures, not one number under different names
Buyers often use "budget," "maximum price" and "walk-away number" interchangeably. They're three separate figures, and conflating them is exactly what led to an earlier version of this guide describing a "$780,000 purchase ceiling, all-in" alongside a "$760,000 maximum bid" without showing how one became the other. This guide shows the actual calculation.
1. Total acquisition budget
The complete cash-and-debt commitment: the contract price, plus land transfer duty, conveyancing and legal costs, building/pest inspection costs, loan establishment and lender fees, an immediate-repair buffer, moving costs, and a remaining ownership buffer. This is the number your total available cash and loan capacity actually needs to cover.
2. Maximum contract price
The highest purchase price compatible with the total acquisition budget once every other cost is subtracted. Because Victorian land transfer duty itself depends on the purchase price, this isn't a simple subtraction — it needs a short iteration (or your conveyancer's or broker's calculator) to land on a price where price + duty-on-that-price + fixed costs together equal the total budget.
3. Walk-away number
The maximum price you'll actually offer or bid — which may be lower than your technical maximum. Reasons to set it lower include comparable-sales uncertainty, defects found during inspection, expected renovation costs, investment-return requirements, interest-rate risk, or simply wanting a genuine buffer rather than a mathematical one. Setting a walk-away number below your maximum is a rational decision, not excess caution.
Worked example
Total acquisition budget: $780,000. Land transfer duty at a $727,000 contract price: $38,690 (calculated as $2,870 plus 6% of the amount over $130,000). Conveyancing and legal costs: $2,000. Building and pest inspection (already paid): $600. Loan establishment and lender fees: $500. Immediate repair buffer flagged by the inspection: $6,000. Moving costs: $1,500. Remaining ownership buffer: $3,340. Together, price plus costs equal approximately $780,000 at a $727,000 contract price — the buyer's maximum contract price. Their comparable-sales evidence puts the property closer to $705,000–$715,000, so they set their actual walk-away number at $710,000, below the technical maximum, to reflect that uncertainty rather than bid to the ceiling.
Practical checklist
Before you calculate your limits
- List every non-price cost: duty, legal/conveyancing, inspections, lender fees, buffers, moving
- Calculate land transfer duty at your likely contract price, not a rounded estimate
- Back-solve your maximum contract price from your total acquisition budget
- Set your walk-away number using your comparable-sales evidence, not the maximum alone
- Write your walk-away number down before you start negotiating or attend an auction
Relevant Delora tool
Questions for a professional
- Given my total acquisition budget, what's my actual maximum contract price after duty and costs?
- Does my walk-away number leave a genuine buffer, or just a mathematical one?