It depends. It can be a bit of a gamble. If something happens and you need to sell the home within a relatively short period of time, you could lose even more money than if you paid the market price. However, sometimes you can also start a trend that results in overall increased value for an area. Once you've willingly "overpaid" you've created a comp that will be used when assessing other purchases. My neighborhood saw sales prices jump roughly 10% last year because one person came along and paid cash for a house that we really thought was overpriced.