A study by two University of Chicago economists, discussed in depth in this New York Times article, questions whether real estate agents are well motivated to negotiate the best price for their clients.
The study, which are based on 98,000 home sales in suburban Chicago between 1992 and 2002, concludes that "agent-owned homes, on average, stayed on the market 9.5 days longer and commanded median prices that were 3.7 percent higher than comparable homes owned by clients." 3,300 of the 98,000 homes were owned by real estate agents.
It is actually easy to understand. Take my house as an example: based on recent sales in my neighborhood, my house can probably fetch anywhere between $360,000 to $380,000. If I use an agent to sell my house, in the typical 6% commission structure (3% to buyer's agent and 3% to seller's agent), my agent will receive $10,800 if the house is sold at $360,000, or he will make $11,400 if the deal is closed at $380,000. In other words, it only benefits the agent's pocket by $600 even if he has to negotiate $20,000 more, which is almost a mission impossible, which, if ever accomplished, may take couple of weeks' time.
The same math applies to buyer's agent too. So, both agents are motivated to close the deal fast instead of close at the fair price.
So what's the answer? Either you can negotiate a different commission structure for your house (like a flat $6,000 plus 40% of anything above $360,000), or you can try to sell the house by yourself using resources like ForSaleByOwner.com or FSBO.com. I'm actually leaning toward the FSBO solutions -- unless I can get a relocation package that covers the commissions once I move out of the area, I will try to sell by myself. It will be an interesting excursion in my journey (not to mention lots of posts to write).