Potential points of contention for agents

Real estate commissions are becoming a point of controversy. Home values in many areas have quadrupled over the past 20 years. This may be contributing to the increased number of licensed agents and growing competition between them. The number of real estate agents in areas tends to rise when home values do, and the productivity of existing agents goes down.^{[citation needed]}

Another controversy exists around how commissions paid to real estate agents are disclosed to buyers and the effect additional seller incentives may have on the negotiation process and final purchase price.^[12]

If a listing agent sells a property for any amount above the listed price, he in turn will make additional income. In theory, this will motivate him/her to get top dollar price for his client, the seller. However, if the agent representing the buyer attempts to obtain a lower sales price for his client, then he/she would make a lower commission. Thus, it could be considered to be in the agent's best interest to advise his client to purchase the property at a higher price. Although not very likely since the difference in the commission is very little and the agent would not want to jeopordize the deal.

According to economist Steven Levitt in his 2005 book Freakonomics ^[13], in practical terms, there is rarely a great enough difference between the listing (asking) price and the negotiated selling price to make a significant difference between the commissions generated on each side, and certainly hardly enough to justify an agent failing in his fiduciary duty to obtain the best terms for his/her client. However, when an agent is selling their own property, there exists a greater incentive to sell for a higher price and this is seen in examining historical home sale prices. ^[14]

Another potential conflict of interest exists when a listing agent in a very active real estate market has incentive to sell properties quickly at unnecessarily low prices in order to benefit from a high volume of sales.^{[citation needed]}