Yet another in a series of posts quoting sellers who think that their home has a higher objective value than what they can get from potential purchasers:

Greg and Barbara Abbott have already cut the price twice on the two-bedroom condominium they are trying to sell on the Las Vegas strip. They're asking $669,900 now -- and an offer in the $650,000 range means they'll lose money.

Abbott thinks hesitant buyers don't realize how reasonable the current price is. "They're not really being realistic about what the place is worth," he said.

Oddly enough, the objectively reasonable price is always above what the buyers paid for it, after commissions. The Abbotts paid $583,425 for their house last April. The market in Las Vegas has tanked since then, with prices down 20% from January 2007 to January 2008, according to the Case-Schiller index. I don't think it's the buyers who aren't being realistic. More generally, as famously explained via the solution to the "diamond water paradox," the value an item has in the marketplace is solely what the highest bidder is willing to pay, based on subjective valuation.