Buyer’s brokers operate under a fundamental, and structural, conflict of interest between their ethical duty to clients and their personal financial incentives in each real estate transaction.
Brokers earn commissions based on the final sale price. This structure encourages higher prices. However, in balance, their incentives to negotiate lower purchase prices for buyers derive primarily from ethics and reputation.
Buyer brokers typically receive a commission calculated as a percentage of the home’s sale price, meaning their compensation increases with higher prices. This direct link creates an inherent tension: maximizing sale price benefits the broker financially in the short term, but conflicts with the buyer’s goal of paying the least possible price.
Although the broker’s commission reward grows with price, the financial gain from higher prices on a single deal may be modest compared to overall career earnings as a function of the broker’s reputation and professional responsibilities.
Thus the tension between broker commission structures and fiduciary duty highlights a structural conflict where the broker’s financial reward for higher sale prices may be outweighed, to whatever degree per transaction, by ethical imperatives and business sustainability concerns to protect the buyer’s interest.