Real estate agents are the craziest example of this.

That's just a commission on a sale. It's the similar, but not the same. When I buy a house, there isn't an amount tacked on to pay the agent, that comes out of the sale price.*

Unless you're saying real estate agents are expecting tips now. That's messed up.

*Now, there are a bunch of other hidden fees and closing costs associated with a house to where you just need X% of the cost of a house in just to handle that bullshit.

It’s not twice as much work to sell a $2 million house as a $1 million house. Why does it cost twice as much in real estate agent fees?

For the buyer it also badly misaligns incentives. A buyer's real estate agent is financially better off finding the most expensive property their client is willing to buy rather than the cheapest property that suits the client's needs.

In this case, so?

Like I said, you're not being charged anything there. It comes out of the purchase price.

It's the agent who is listing the house at a price and sourcing the various inspectors and appraisers. They're putting in the work to sell your house at a price point.

So, if the agent can manage to move your house for $2 million rather than $1 million, why shouldn't they get a larger reward?

It's a different scenario from servers. Servers can't convince you to pay more for an item or for the business to sell that item for less. Real estate agents can.

This assumes that any house can go for $2 million if you just get a good enough agent. That’s clearly not the case. If there was some way to pay for excess returns, that would be a good argument. But flat commission percentage isn’t it.

> So, if the agent can manage to move your house for $2 million rather than $1 million, why shouldn't they get a larger reward?

Indeed, for the seller this makes sense and the agent's and seller's incentives are aligned. But there's a nasty externality created where real estate agents contribute to a constant upward pressure on housing prices. This eventually helps make housing unaffordable.

Selling agents are incentivized downward, because in reality, agents are incentivized to churn.

Agent commission is just shy of 6%. And that's for both the selling and buying agent. So they each get around 3%. For all the work you could be doing maximizing a house's selling price to get another $1k or $2k, you could be closing another house and getting another $10k.

Your question falsely assumes that a real estate agent's value is measured in a lumps of labor. If that were the case, we'd see lawyers being payed the same amount of money for reading the same book of law. The real estate fees are a negotiated cost in lieu of hourly payment.

If it were in lieu of an hourly payment it would vary from agent to agent (depending on expertise) rather than house to house (depending on price). This is how lawyers work. Some are $200 an hour and some are $500 an hour.

As a water drinker I always pad a few bucks onto my bill. Water is free on the bill, but I want the server to think water drinkers are worth a bit more in tips so bring them their refills.