If the feedback you get from potential buyers is too high, then you'll need to go for a pricing reduction or reduce your potential margin to meet their need for lower pricing.

How much of a margin should I build in to account for bad things happening? 

There are lots of quantitative metrics ("mainstream" as you say) to observe here (P/E for the S&P - see chart below, margin levels, ratio of total market cap to GDP, etc), & anyone with access to google can see the same numbers.

I think it is ok to give yourself a little margin of error.

The 3 times we put out offers on nice places, we were completely outbid and the properties went for a pretty big margin over ask.

Our seller was interested in cash flow on a monthly basis and wasn’t concerned about overall profit margin as much.

never made much sense to me watching people pay full retail sub too.. margins just too thin.. and I did not have a burning desire to have rentals that made 100 a month LOL..

Of course it depends on extent of reno and ultimate profit margin.

There are always "it would be nice to haves" that will cut into your profit margin. 

I think the point of your post was about the margin made by the company between the purchase and sales price - and you're right, we don't sell our properties at cost, and that's where we make most of our profit.