The question should be "why not?" There are two very distinct philosophies in real estate investment. Some think that you make your money by buying "right" and others believe that the profit in real estate comes about by the actions of time, inflation, use change, and utilization.
A story: I bought my first house in 1969 for $18000. I was young and brash. I wanted the best deal possible. The asking price was only $19500. That $1500. represented ALL of the sellers' equity. They walked away with nothing.
Twenty years later my ex-wife sold the house for over $500,000. In the big picture what difference did that $1500 make? None to me but a lot to the sellers.
If the property is worth having, it is worth having at market price.
Make your money the old-fashioned way. Not by stealing but by using your head. Find a way to build equity in the property by improving it, or holding it to let development to catch up with you (path of progress) or build equity through time and inflation.
A good solid investment property will do nothing but return an excellent ROI if managed properly. Even a property with a 4- or 5% cap rate can make sense if held for a number of years, managed properly, and located in a growing area.
Flippers may not like hearing this but too bad. Didn't your mother teach you not to steal?
Now go out and do the right thing.
;)
;)
Interesting post but, here is my question, why do we make the assumption that asking price is fair market value? In my market there are numerous homes available in some subdivisions where the lowest list price is over 10% above anything that sold there in the last 6 months. In this case the list prices are "above retail" and totally irrelevant to the home's true value. Unfortunately, sellers' wants and needs have no bearing on market value, and demanding full price for a home that is more than 10% over market is just as much an attempt to steal. Market value is defined what a willing buyer and seller are willing to agree on, when neither is under pressure to act.