Estate property has offers but now trustee wants to buy. What should the real estate agent get paid?

The bank only sees this as a refi since your wife already has ownership in the property. Since you can't buy from yourself lenders have to treat it as a refi. However, legally it is a purchase since your wife is buying out other peoples interest & the realtor is entitled to commission based off of what ever the sales price is (not the market value as someone else here said.)

Just because the bank is "viewing" it as a refi for lending purposes, it's not really a refi. The property is being sold and your wife is buying it, correct?

If there is a signed listing agreement and the property is indeed being sold, then I don't see what the confusion is. The contract states what the listing agent should be paid and commissions are based on sales price, not sales price minus down payment.

If you want to be a real jerk you can decline all offers until the listing agreement expires and then do what you want without the agent. I'm not recommending that, I'm just making the point that there is a contract with the realtor that needs to be honored. If there is confusion about the contract, consult an attorney.

The agent is due a commission based on the sales price. It's only a refi in the eyes of the bank. You are buying the home from the trust.

The agent gets paid based upon the market value of the house - the 20% equity is the down payment on the $400,000...the amount of the mortgage has nothing to do with the transaction, so the transaction between the parties is $400,000. If the agent pushes this in court, you will lose and owe the added commission plus court costs.

when you say the agent brought two offers to the table and your wife made an offer after hearing of these others

it sounds to me like she is participating in the offer to sell just like any other buyer and I frankly would not view this as a refi but as a firm offer to buy