The Real Reason So Many Agencies Look Big But Earn Small
Walk into any property agency’s office and you might be impressed: rows of negotiators, loud morning cheers, glossy posters, and social media feeds that scream “growth.” On the surface, it looks like success. But behind the noise, many agencies are barely scraping by. The pressure to show growth—to investors, to the market, to competitors—often leads to a dangerous focus on the wrong metrics. The core reason? Headcount doesn’t equal profitability.
Headcount Inflation: When Size Becomes an Illusion
In Malaysia’s real estate world, agencies often measure their success by how many negotiators they have recruited. “We have 1,000 agents under our brand” sounds powerful, but the reality is sobering:
- A large percentage are inactive or part-timers who close one or two deals a year.
- Many are new recruits who drop out within 6–12 months.
- Top producers—the ones who actually bring in revenue—are about 10% to 20%.
The headcount number becomes an illusion. Agencies look big but are actually carried by a handful of performers, while the rest inflate the payroll, admin workload, and marketing spend.
👉 This is why we often see corporate agencies with just 5 negotiators out-earn flashy agencies boasting 1000 names on their roster. Quality trumps quantity every time.
The High-Payout Trap: Chasing Growth, Losing Margins
In the early days of developer projects, negotiators received 40% of commission, while the agency kept the rest. Over time, competition drove this to 50%, then 70%, and today, some agencies pay out as much as 90–100% to team leaders and closers just to stay attractive.
On paper, it sounds like a win for agents. In practice, it’s a race to the bottom:
- Bosses sacrifice their margins. With almost nothing left after payouts, agencies struggle to cover compliance, overheads, or marketing.
- Team leaders capture the pie. Leaders negotiate higher overrides, leaving agencies as little more than licensing shells.
- Short-term loyalty. Agents attracted by the “highest payout” will jump ship as soon as someone offers 1–2% more.
- Illusion of volume. Agencies may trumpet RM200M in annual transactions but keep almost nothing once payouts are made.
- Events = Productivity (The Hidden Cost). Big dinners, travel trips, and award nights often look like motivation tools—but they usually come at the expense of even lower splits or thinner margins. The agency foots the bill to look vibrant, but profits quietly drain away.
The result? Agencies look massive in sales volume and headcount, but bosses earn crumbs while carrying all the legal and operational risks.
The Shallow Revenue Stream Problem
Most agencies rely almost entirely on commissions from closed deals. That’s a single revenue stream—and it’s fragile. When markets slow, transactions stall. When developers delay payments, cashflow dries up.
Other weaknesses include:
- Project Dependency: Overreliance on launches means income swings wildly with developer cycles.
- Weak Rental Pipelines: Rentals are dismissed as “too small” but could provide steady recurring cashflow.
- Override Illusions: Even with a big team, overrides are meaningless if base agents don’t close deals.
Without diversification, agencies stay vulnerable—one delay or downturn can cripple them.
What Actually Builds Profitability
The agencies that thrive long-term share common traits. They:
- Build Lean, Productive Teams – Fewer, consistent closers outperform bloated armies of inactive names.
- Systemize Processes – ERP systems track every deal, commission, and expense, preventing financial black holes.
- Diversify Revenue Channels – Sales, rentals, co-broking, referral income, even fintech services. One stream isn’t enough.
- Focus on Retention Over Recruitment – Keeping top performers engaged beats endlessly chasing new bodies.
These aren’t glamorous metrics to post on Facebook, but they are the foundations of a profitable and resilient agency.
Final Word
Big numbers make for nice social media, but they don’t pay the bills. Between headcount inflation, commission inflation, and shallow revenue streams, many agencies are stuck in the illusion of size while earning almost nothing.
The question every boss should ask is simple: Do I want to look big, or do I want to earn big?
