Solving the Fast Commission Crisis: Stop Letting Developers Use You as Their Bank
For too long, Malaysia's real estate agencies have been trapped in a destructive cycle: Developers launch - Agents sell - Developers delay payments - Agencies collapse.
It's time for a crucial realization: The financial instability caused by the "Fast Commission" problem—where agencies risk their capital to pay agents upfront—doesn't start with agency operations. It starts with developers who pay late and use agencies to finance their own cash flow.
The Root Cause: Developers Banking on Your Risk
Let’s be clear: Developers delay commissions because they are struggling with slow sales or slow loan disbursements. To manage their own liquidity crisis, they simply pass the cash flow burden onto the agencies that move their stock.
The massive hike in commission rates over the last decade (from 2% to 4-7%) wasn't pure generosity; it was often a sign of desperation. Developers pay more because they know they are paying slower. They use high commissions as bait, knowing that agencies will advance the risk and absorb the financial strain for months or years.
In this broken structure, agencies are forced to:
- Borrow money at high interest rates.
- Advance fast commissions to keep agents motivated.
- Risk total collapse if a single developer defaults.
Every agency that failed due to unpaid developer commissions did not fail because of sales; they failed because they chose to act as an uncompensated financier.
The Collective Blind Spot: Why Carry Their Burden?
The power dynamic in the market is fundamentally skewed, yet the truth is simple:
Developers need agents > Agents need developers
Without agents, developers are simply sitting on unsold inventory. Without developers, agents still have subsales, rentals, auctions, and various other income channels. Yet, agencies continue to accept the burden of funding developers’ delays as if it were their sole responsibility.
This cycle must end. The solution is not complicated; it requires collective discipline to redraw the power balance.
The Simple Solution: Redraw the Terms of Engagement
The industry can solve the fast commission problem at its root by demanding structural change from developers.
1. Enforce Immediate Payout in the Appointment Letter
Stop signing vague, one-sided agreements. Every agency must insert a non-negotiable clause into the developer’s appointment letter:
"All commissions are payable immediately upon the signing of the Sale and Purchase Agreement (SPA)."
No exceptions, no "subject to progress billing" clauses.
2. Halt Sales Activity Immediately Upon Default
The moment a developer fails to pay the first SPA commission on time, the agency must take immediate action: halt all sales activity for that developer. Do not chase, do not negotiate, and do not wait until the outstanding debt reaches millions. Stop selling.
3. Work Only with Ethical Paymasters
Malaysia has hundreds of developers. Agencies should collectively choose to partner only with those who treat them as partners, not free labor. Sell only for developers who honor their payment terms promptly.
The Only Sustainable Model
The entire stressful and risky "fast commission" ecosystem exists only because developers broke the payment trust first.
If developers paid immediately upon SPA signing, this system would be unnecessary:
- No agency borrowing needed.
- No interest cost deductions for agents.
- No massive risk of agency collapse.
Fixing the root cause doesn't require complex finance; it requires collective unity and discipline. When agencies stop financing developers, the power dynamic will naturally flip. Developers will be forced to reform their financial practices because their unsold projects will be held hostage by their own failure to pay.
The new rule should be definitive: "If you don’t pay upon SPA, we don’t sell." Respect starts with clear terms, and power starts with a united front.
