Really, it's just part of the scam. Most people actually believe the seller is paying the realtors. It's how the buyer's agent can say, "Don't worry about my rate, the seller pays it!", as though you're sticking it to the seller. I've already seen three people repeat/believe that lie in this thread.
If what the realtors said was true, there would be a conflict of interest. However, there isn't really a conflict here because the buyer and seller are both splitting the loss. One is paying too much, and the other isn't getting paid enough.
The real conflict comes because both agents want you to compromise your price for an easy sale. If you sell your $500k house for $20k less than it could, they only lose a few hundred dollars. That agent will play various tricks to try and talk you into losing $20k so they can get a quick sale and be done with you. Similarly, they don't care if your loan is a bit larger when you're buying. They're not looking out for your best interests.
If the middlemen/parasites were out of the loop, the buyer could pay 3% less, the seller would get 3% more, and some reasonable agency could get a fixed fee for doing the paperwork. Hell, the title agency could do the work trivially, but I'm guessing they don't want to risk rocking the boat. Maybe the current system was reasonable when all you had was newspaper listings and for sale signs, but it's corrupt now.
