Hi, I used to work in real estate too and unless things have changed in the last few years, the agent has a legal obligation to submit all offers to the seller from all buyers until the seller is in receipt of a signed contract and a deposit has been paid on the contract price. I have heard of agents making up the difference as I too have dropped my commission to get a sale but I've always had to put all offers to the seller, though they don't have to offer inspections unless the owners are really wanting other offers. It makes me think that there aren't any other interested people in this property and they are trying to make you pay top $$$ anyway. To be honest unless you really really love this property and are willing to pay for it, I'd walk away. It's a buyers market at the moment. Agents always mark up what a property is actually worth so if someone wants/needs $300,000 for a property it will be marketed at around $310 - 320,000 because hardly anyone offers what people are asking. When we buy our investment properties we only go as high as $5 - 10,000 less than what the agents asking and we make sure the owners/agents know that it's our final price and if it's not accepted we walk away and keep looking. You'd be amazed how many agents ring you back in a few days to say that the owners have reconsidered and now willing to accept the lower offer. Never pay full price unless you absolutely have to, while there are some great agents out there at the end of the day the more money a property sells for, a higher pay check they receive and if a property doesn't sell at all, they don't get paid at all for all the time they've spent doing opens and marketing the property unless they are on a wage and not commission based but most agents these days are commission based. I know from personal experience that sometimes you have to bend over backwards to close a sale otherwise you don't get paid and that can be quite tough when it's quiet on the market.
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