the gap is I suppose some idea (in the sellers head) of demand (and what they're agent has told them its 'worth').
The house we bought in Edinburgh was purchased for pretty well spot on valuation (but that's an elastic science / art in itself). When we sold it it was for much the same (as in valuation there or thereabouts). The buyers' surveyor even asked me what the asking price was, nodded, and seemed to just write that down (we weren't going crazy on prices though).
Used to be pretty common to have a house offered up at a silly /low/ O/O price (this was Edinburgh in mid 80s) in order to get folk to have a look, confused the hell out of an out of town lad like me. You'd go into a flat and think "no way" and sure enough, ask the seller what they were looking for, it bore no resemblance to the OO price.
If it's a nice place, and you reckon it'll do you for years, ask them what they'd like, root around for some loose change, and go in with a pre-emptive offer..
Up here we took the cash from selling an end terrace in Edinburgh and buying somewhere that'll do us for say 15 years, I reckon any over-bidding is negated on that timescale. Kind of like my folks did - overpaid by some margin, in 1973, mum still stays in same house..