No reason to be baffled. It's overpriced, based on its condition and location. While I'm not a rabid "cut the price, cut the price, cut the price" (other factors, such as a poor appearance, need for staging, etc., can be addressed to come closer to the price you'd like), it really usually comes down to price.
And, because it comes down to price, what's with the questions about an auction? Generally, auctions will result in a sales price of 90%-95% of the fair market value. Very, very seldom will an auction price exceed comps. So, if for example your house is priced at $300,000 and it hasn't sold in a year, then let's say the real value--the price at which it would sell--might be $275,000. In that case, an auction most likely will bring in somewhere around $255,000-$265,000. And that's on a good day. If you're lucky.
Now, auctions do have a value in today's market. But consider, too: In an auction, you'll very often be asked/required to put up several thousand dollars to market it. Plus, there typically is a 10% buyer's premium. So someone buying your house for even $275,000 will know that they've got to cap their bidding at $250,000 to keep their total expenditure down to $275,000. On top of that, most auctions sell the house in "as is" condition. That eliminates a major contingency and reduces the hassle factor of a buyer coming back and asking for repairs. But that also means that bidders will keep their bids lower, knowing that it's an "as is" purchase.
One other point to consider: You'll either sell your house "no reserve" (no minimum bid; the highest bid, however low it is, takes it) or "reserve" (a minimum price is set). In an auction using the figures above, your reserve might be set at, say, $225,000. Are you willing to sell your $300,000 house (truly only worth $275,000) for $225,000 if that's the highest bid that's made?
Auctions aren't the cure-all for overpriced houses. They can be effective in the right circumstances.
Hope that helps.