Imagine you had a medical condition, and sought advice from an expert.
They told you that, while there was a tiny chance that you could spontaneously recover, in the vast majority of cases the condition was degenerative. Meanwhile, there was a medicine available that was 100% effective, albeit expensive.
Would you take the medicine?
The vast majority of people in this situation probably would — and sooner rather than later (at least assuming they could afford it*).
“Needles in Haystacks”
Now substitute “home seller” for patient, “Realtor” for expert, and “unrealistic asking price” for “medical condition” . . . and suddenly people’s behavior changes.
Instead of responding rationally to overwhelming evidence that their home is overpriced for current market conditions, they opt to wait — hoping for a stronger market, a needle-in-a-haystack buyer . . . or both.
Unfortunately, like the aforementioned, hypothetical medical condition, time is your enemy when you are trying to sell an overpriced home.
By the time the patient is resigned to taking the medicine, the chance for a “cure” may already have been squandered.
*Of course, just like some patients are willing to take medicine but can’t afford it, some home sellers know that their home is overpriced, but can’t afford to reduce it — because they owe more than its fair market value.
Then, they either need to pursue a short sale, whereby the bank(s) reduce the mortgage amount, or, failing that, contemplate defaulting.