Hi Azalia, just a thought, if you renovated NOW before the tenant moves in you will be able to claim depreciation on those renovations, likely improving your cash flow during the period you own the property. As Benny mentioned, you would also likely benefit from higher rent.
The timing may not be right for you, but it may be something to consider if it can be done.

Roberto, it's actually quite possible that the agent is being honest in this case. It's not uncommon for a high offer to be put forward that the owner accepts, only for the sale to fall through. From the owners perspective they think, it's obviously worth what they're asking, 

True the agent may be trying to justify in your mind that the asking price is worth it due to a previous offer, but that's the Agents job. That said, the way you worded the above is that the vendor wants that price, and the agent is simply following instructions.

If it is a ploy, it's not a very good one anyway.

As mentioned by previous members, do your research, and offer what you feel it is worth. If the owner doesn't budge, move on. 

According to http://www.consumer.vic.gov.au/, "…Do not sign anything, including a sales authority, unless you are prepared to engage the services of that agent. You do not have a cooling-off period (time to change your mind) after signing a sales authority."

Not sure what you could do legally.

At the end of the day, I guess you could just not allow the agent to show anyone through. He will get the hint eventually.

One thing I would look at is if your first purchase will later become an investment, than it can become difficult to look at your purchase objectively. What I mean is, you may miss out on a great investment with solid returns, because you couldn’t see yourself living there for whatever reason. Alternatively, you may find a property that you love and feel’s like home, but it may make a lousy rental. Can be hard to get the best of both worlds. But as the others said, hard to give advice without knowing the full situation

Generally speaking, (in NSW anyway) deposits are held in trust with the estate agents. if there is a deposit they should be able to produce trust account receipts as proof. There should be no reason this cannot be shown.

Hi Mate, long time lurker, first time poster.
To answer your questions;
Not sure why you need a holding deposit to even place an offer? sometimes deposits are placed at the offer stage, but not sure why before?
Anyway, firstly beware of holding deposits as the name is a little deceitfull.
I’m an ex estate agent from NSW, and a holding deposit does not guarantee you the property in the event that an offer is accepted, you can still be out bid, so to speak. All it means is that if a higher offer comes in that the vendor accepts then the agent MUST make you aware of it, thus giving you an opportunity to up your offer.
Remember only an exchange of contracts secures you the property
Yes the deposit is 100% refundable prior to exchanging contracts, you will lose 0.25% if you pull out during the cooling off period, and the total deposit if pulling out after the cooling off period has expired (usually 10%, sometimes 5%, not uncommon)
Yes add in conditions to your offer; P&B, requested deposit amounts etc.
If you have finance approved mention this, help make the offer more legitimate.
Remember negotiations are give and take, you conditions seem fine, but don’t let a sale fall over, over something small (eg vendor request 35 day settlement, no 30 etc)
Hope this helps