There seems to be a disconnect between what might be considered a reasonable list price and the price the "new" buyers are offering in the marketplace. Probably, more to the point, there seems to be a disconnect between Realtors doing a little research on homes that match what they're clients might possibly qualify for and what they show and eventually tender an offer for.

Here's a case in point:

I have Seller of a mid-range townhouse in a good location (nice magnet school, close to good public transportation, shopping and commuter routes), in a nice community with some decent amenities.  The townhouse, while not in Martha Stewart condition, is nice with some newer systems in place (like a newer HVAC system).  The Sellers are tuned into the fact that the market is in the doldrums and, if they want to get showings and an offer, they need to price their home competitively. So, they're $20,000 less than the most comparable comps and priced near a comparable "as is" "short sale". (This house is a "regular" type sale.)

They get a good smattering of showings and the feedback from agents is generally positive.  One offer comes   in but it starts $15,000 less than list and then asks for 6% closing help on top of that and, of course, the home inspection contingency. 

This type of offer is so low both to the market and to this individual listing that it's almost insulting and it gets me to scratching my head.  What is the Realtor thinking?  If their client can clearly not afford homes in the price range of a certain community or area why would they even show houses in that range?  I will concede that many Sellers have the "start high and negotiate lower" mentality but when it's easy to see that a home is already listed low to the comps and community, shouldn't it say something?

I certainly don't show my clients million dollar homes when they only qualify for $500,000 ones or even $900,000 ones. 

In my view, it's all in the preparation. If the listing looks like it might be "investment grade" or less than go for it. But if a house is obviously not a "short sale" and their aren't any of the code words in the listing description that say "I'll take anything" then do your client a favor, show them homes they have a prayer of being able to purchase.