lep,
It may depend upon how desparate and it may not. Many times they dont have a choice and cant write that check so they hang on for dear life hoping for the best. Dont know if that is the case but…

As for the $/sq ft, if the houses are larger they will almost always sell at lower prices per sq ft. Much of the costs in building are fixed. The costs of adding a several hundred sq ft to the size of a new home is much less than building the initial smaller home. If you are going to compare $/sf you need to be comparing homes that are the same size and at most within 10 to 15% of each other in size.