This is an issue that is bothersome to most buyers. I was once in a situation where I found a house I liked, and bid the asking price. The listing agent called my realtor and said that although we had the highest offer, he would like everyone to resubmit bids the following Saturday. Through the local real estate community gossip, I found out that the listing agent had a customer that had been outbid, and he wanted to give that customer a chance to bid again so that he could get both sides of the deal.
For this reason, I was against going into another round of bidding. I told my agent to offer a few grand more with an offer expiration that night. The listing agent's response was that he didn't want to pressure the owner to sell. I had just assumed that since she had a "for sale" sign in front of her house, and had hired an agent and selected a selling price, that she had actually wanted to sell her house.
Anyways, I told the listing agent that I was walking away. The house sold for less than my original offer. And then, that buyer's financing fell through and it went for even less. Had the listing agent done what was right for the home owner and taken the best and highest offer, the owner would have sold her house for me. Instead, he got greedy. Unfortunately I have seen this happen a lot.