What do they mean? Well, by setting prices at levels they do not expect to generate a sale in the market, and subsequently dropping the price several times over the next few months, they are creating artificial declines in the market. There isn't anything real about them, as the initial price wasn't in the realm of possibility to begin with.
Lenders aren't fooled. To the contrary, they become even more careful and diligent in their valuations for loan approval. They can't trust what the surface data is telling them. I know this goes on in my vacation home market all the time. Many sellers want me to list at an unrealistic price to "test the market." Sorry, but there is really nothing to test. The market is slow, and your home is not going to have a chance of selling at the price you want.
More real estate professionals need to risk losing the listing before caving in to this type of pricing approach. It doesn't help anyone. Better to lose the listing and get them back six months from now when they're better educated and upset with the other Realtor who let them price out of the market.
