It's pretty simple....today's sellers are trying to sell their homes for as much money as possible while today's buyers are seeking value and the best deals out there.
Somewhere out there a number exists that can make both the buyer and seller happy. A real estate professional can help you determine what this number is.
Hot water heat is not a killer in fact some buyers look for hot water heat! I have sold 3 properties that had hot hater heat in the last 12 months and only one had central air to go with it. One of my buyers sat on the radiator of one of the homes this winter as she was looking at it and made the comment "It's just like a Saab seat".
Good luck and rather than try to beat up this seller go out and find one of those 55,000 houses.