Well this question was asked in 2008 and in four years much has happened! As with other parts of the country the prices have coasted down. Buyers stopped making offers waiting for the market to bottom out. Currently, I have witnessed a resurgence of buyers who are out looking and buying again. The mortgage rates are holding relatively stable at historically low rates. Prices are more realistic and no matter what, people need a place to live. The sellers who have accepted the idea that they are not going to get what they paid for their home, but will also enjoy the same price reduction on their next purchase of a home are the ones who are successfully selling their properties. Those who are holding steadfast to their high price and "leaving lots of room for negotiating" will continue to have their properties languish on the market with few showings or offers. It hurts a seller when the buyers who have been waiting on the sidelines for each new listing to come onto the market, look at the new overpriced properties that emerge and won't even schedule an appointment because they recognize it is overpriced. If you can't get their feet in the door you can't get them to make an offer.
It may hurt but sellers need to bite the bullet and price their homes to the market. They'll sell their home and be able to move on with their lives!