The vendor discount: sellers are settling for less, and how to tell which ones

Three weeks ago, a buyer walked into a negotiation and said, "The vendor discount is 4.4%, so I'm offering four point four percent under asking." The agent went quiet. The seller hung up. The property sold four days later to someone else for forty thousand dollar more than that buyer offered. The number was real. Quoting it back was a mistake. Here's what to check instead on your own phone tonight. Last weekend, fewer than half the homes at auction across our capital cities sold. The clearance rate finalized at 44.1 percent, the lowest since late June. The headlines called it a disaster for sellers.

But across the capitals, the typical seller is now settling 4.4 percent under what they first asked. That's just under forty-three thousand dollars on a median city, city home and the biggest discount in five years. A clearance rate tells you what sold. The vendor discount tells you what a seller actually settled for. One is sentiment, the other is money. I'm Rasti Vaibhav. I've bought twenty-two properties with my own money, and I now run an independent buyer's agency. So yes, a market where buyers have a leverage is good for me. Hold that against me for the rest of this video. Three things.

Where that 4.4 percent comes from and what it means in dollars. The Three-Signal Test, which tells you which side of it the property you are watching sits on and what to do with it in the next ten minutes if you have a pre-approval sitting in your inbox with an expiry date on it. Now, where does that 4.4 percent come from? Every month, CoreLogic, the company behind the Home Value Index, publishes the Housing Chart Pack. It's free, it's public, and it sits behind the headlines, not in them. If you have never heard of a vendor discount, that's not on you.

The vendor discount is the gap between what a seller first asked and what they actually sold for. It's not a forecast. It is measured on completed sales. On page 22 of the October Chart Pack, the median discount across the combined capitals reached four point four percent over the three months to September. Cotality's own words: its highest level in five years. A month earlier, it was 4.2 across the regions, it's 3.9. Now, put a number on that. The median capital city home was worth about nine hundred and seventy-four thousand dollars at the end of September.

And 4.4 percent of that is just under forty-three thousand dollars. That's a rough size because the two figures come from different releases. It's the difference between the sticker price and the drive-away price. You're thinking, "That's a median. That's not my property. "Correct. Half of those sellers gave up less than that, and half gave up more. And the whole job is knowing which half you're standing in front of. So here's a three-signal test. Three free signals I check, and you can check them on your phone tonight. And the third one is the one most buyers miss. One. Days on market.

Open the listing and find the date it went up, then compare it with that suburb's own median. Capital city homes are taking a median of thirty-nine days right now, but the cities are far apart. Canberra homes taking fifty and Perth homes twenty-six, and suburbs vary more again. So forty days is quicker than usual in Canberra and half as long again as usual in Perth. If you have stood in a kitchen on a Saturday and wondered why nobody else turned up, you were reading the signal without a number on it. Two. The price history. Scroll down to it.

Has the price or the guide come down since it's launched? A seller who's already come down once has already had the conversation with themselves about coming down. Three. The listing history. Was it withdrawn and relisted or pass in at auction? A fresh listing date on a property that was on the market in autumn is a fresh coat of paint on the same for sale sign, and the portals keep the history. There's a one most buyers miss. If you're thinking this sounds like work, it is, about ten minutes of it.

It's an easy ten minutes to skip because the asking price looks like the real number. One signal on its own tells you little. Two or three together make it more likely you're looking at the half that gave up more. That's the Three-Signal Test. None of them tells you what to offer. They tell you where you're standing. Quick note: if you want to know what this means for your own situation, your deposit, your borrowing capacity, this rate cycle, the free Buy, Wait, or Sales workshop is linked below. I'll come back to it at the end.

Let me show you all three on one listing and the moment where the buyer had to choose. This is not a real client, and the prices are made up, but it's realistic shape for right now Say it's a one-bedroom apartment in Manly, listed with a guide of $1.2 million. It's passed in at auction in week two, and the guide drops to $1.15 million. By day fifty-two, it's still there. And one-bedroom apartments in Manly have been selling in a median of about twenty-eight days. All three signals. The buyer opens at $1.02 million. The agent says, "That's going to offend them.

We need to come up. "The tempting move at the moment is to jump straight to $1.08 million. This buyer waited. They said, "That's our offer. Let us know. "Three days later, the seller counters at one point zero eight, and they settle at $1.055 million. That's ninety-five thousand under the asking price and one hundred and forty-five thousand under where it started. Notice what this buyer didn't do. They didn't go 4.4 percent at the agent, and they didn't jump when the agent pushed. They checked the three signals, made the offer, and let the seller make the next move.

It is not a formula, and it is not typical. It's what patience looks like when the signals say a seller has already had the conversation with themselves about coming down. The buyers who missed it, they walked through that open home, saw 1$.15M, and believed it. So why is this happening? Picture this. Fewer buyers. More stock. Less borrowing power. And each one feeds the next. Fewer buyers. About forty thousand homes sold across the country in September, down nearly twenty-one percent on September last year. More stock sitting. Not because more people are selling.

New listings are down seven point nine percent and total stock is up nineteen point one percent anyway. Think of a bath with the tap turned down and the drain half blocked. The water's rising, and it isn't because somebody opened the tap. It's because nothing is draining. Less borrowing power. The cash rate has been four point six percent since thirtieth of September, the fourth rise this year. Cotality estimates those rises have cut what a median income household can borrow by almost ninety thousand dollars. Put those together: Fewer buyers, less borrowing power, homes sitting longer.

And the longer they sit, the more sellers give up to get out. And this isn't just me saying it. Here's Cotality's Home Value Index for September, word for word. Buyers generally have more choice, reduced urgency, and greater scope to negotiate, while vendors are having to become more realistic about their price expectations. Now back to clearance rates because it's the number in the headlines, and on its own, it doesn't tell you what you'll actually pay. It counts the auctions. It doesn't price them. You have seen the clearance rates.

Last weekend finalised at 44.1 percent across the capitals, the lowest since late June. The same weekend last year was 68.2. Cotality's own words:"Fewer than half of the homes taken to auction sold. "Here's what it actually tells you. More than half the homes that went to auction didn't sell. It doesn't tell you what a single one of them went for. A home that's passed in doesn't disappear. It goes back on the market with a price on it and gets negotiated. And the vendor discount is about that kind of negotiation: what a seller asked against what they took.

If you remember one thing from this video, make it this. Think of the sold stickers going up on the signboards in your street. A clearance rate counts the stickers. It never tells you what price was on the board before the sticker went on. And if you've felt the headlines and your own Saturdays disagreeing, this is the gap between them. Now, three ways people misuse this number because I'd rather you heard them from me. If you've done one of them already, you're not alone. One. Chasing the median.

Remember the buyer at the start, the one who quoted 4.4 percent back to the agent? 4.4 is a market statistics, not a target. A seller who hears it quoted back hears a buyer who hasn't done the work. Two. Letting the discount choose a property. I've had buyers say, "I wasn't interested in this place, but it's been on the market sixty days, so maybe I can get a deal. "That's backwards. The discount moves the price of something you had already decided to own. It doesn't make a bad buy a good one. Three. Making an offer that only works if rates fall.

If your offer only makes sense when the Reserve Bank cuts rates, you're not negotiating. You're speculating, and I wouldn't do that with my own money. And one honest limit on all of it. Nothing in this video says prices have bottomed. I don't know that, and I would be careful of anyone who says they do. Values are still falling, and the Reserve Bank hasn't ruled out more rises. But here's the question that matters: if you are waiting for prices to fall further so you can afford more, will you still be able to borrow the same amount when they do?

Because those four rises have already cut what a median income household can borrow by almost ninety thousand dollars, and your pre-approval doesn't wait for the bottom. So here's what happens next. You now know the Three-Signal Test, the three signals that tell you which half of the market a property sits in. Days on market, price history, listing history. Tonight, pick one property you have been watching and check them.

When you have done it, tell me in the comments which signals it showed But here's what those three signals don't tell you: whether you should be making an offer at all right now with your deposit, your borrowing capacity in this rate cycle on that property. That's what the Buy, Wait, or Sell workshop is for. It's free, it runs seventy-five minutes, and here's what we'll do: i'll walk you through the exact decision framework I use with my own clients, the one that tells you whether to buy, wait, or sell based on your deposit, your borrowing capacity, and your timeline.

Not the market's. Yours. About twelve hundred people have taken it. The goal is to leave knowing whether this is your window. And two clocks are already running. Clock one: if you have a pre-approval sitting in box, its expiry date is your real deadline, not mine. Every week you wait is a week closer to reapplying, and rates haven't moved down. Clock two: this is October's number. The next chart pack comes out next month. It could move either way. If you're going to use 4.4 percent, use it while it's true. Can't make it live?

Register anyway: the replay comes to you, but here's what you miss: the live questions. That's where you put down your own question to me, and the recording can't. The link is below, and if you've been scrolling listings every Sunday night, wondering whether you are early or late, this is where you work that out on your own numbers. Because the worst decision isn't buying too early or too late. It's making no decision at all while your pre-approval expires. Let's figure out whether this is your window. General information only.

I'm a licensed bus agent, not a financial or tax advisor, so please check anything that affects your money with your own advisor. Nothing here is a recommendation on any property or suburb. The number is on page 22 of the chart pack. Now you know where to look. See you in the next one.