The mechanism is straightforward. Buyers and their agents compare a new listing against what has actually sold nearby in the last few months, and if the asking price is out of line with those comparables, buyers wait rather than negotiate, assuming the price will come down eventually.
Condition is the second factor, but it usually acts on price rather than on whether the home sells at all. Deferred maintenance or dated finishes tend to show up as a lower accepted offer, not a home that never sells, as long as the asking price reflected the condition to begin with.
Fix the price against real comparables first, and most other obstacles to selling become negotiable rather than fatal. Get your hand-reviewed valuation from Joel Dyck.