Our Realtor is telling Us our house won't sell for what it is worth because of foreclosures??

[Liz Rogers]

Hey BPers! My husband and I have a house in VA and we live in Kentucky. We are working with a realtor who did some comps for the area and told us we won't be able to sell the house for what we want because there are 5 foreclosures in the area bringing the prices down. I'm so confused by this. She explained it to me, but it still doesn't make sense to me. How can foreclosures bring the selling price of a house down?? I know that doesn't look good for the neighborhood, but I can't imagine someone trying to negotiate with us saying well the house down the street was foreclosed on so you need to lower your price... Can someone explain this?? Thank you!!! Liz