Why are banks unwilling to actually sell the ‘short sale’ homes? Don’t they need the money?

I made an offer on a house that was a short sale, going into foreclosure. The house is listed at $199,900. My offer was $185,000. The house has been on the market almost a year. But the bank is not accepting any offers, and wants to increase the listing price of the home. If the house didn’t get any offers or sell at the lower price, what makes the bank think it will sell if they raise the listing price? Does this make any sense, and is it even legal?