Why Cutting Out Agents Failed — And Why Sellers & Developers Now Pay Higher Commissions Than Ever
A structural analysis of why real estate disintermediation never succeeded — and why, in 2025, agents are more valuable, not less.
For two decades, the internet reshaped entire industries. Travel agents disappeared. Music distributors collapsed. Retail intermediaries were replaced by e-commerce. The prediction seemed obvious:
“Real estate agents will be next.”
Platforms emerged promising a direct buyer–seller marketplace. Tech founders claimed commissions would collapse. Consumers believed they could save money.
Yet today, the result is the exact opposite:
Developers and sellers in Malaysia are paying the highest success-based commissions in history — in RM, not in percentages.
Many developers pay 3%–5%, sometimes 6%–8%, entirely on success basis. Some even pay RM20,000–RM60,000 per unit for specialised projects.
Why?
Because the market has more sellers than buyers. The buyer pool is limited. Competition for each buyer is intense. So sellers and developers hire agents as special forces, hoping they can bring that one qualified buyer from their networks.
If going direct was possible, everyone would do it. But property transactions are not products — they are negotiation, risk management, and multi-party execution.
Here is the structural explanation of why disintermediation failed — and why agents have become more important than ever.
1. The Transaction Is Not a Marketplace — It’s a Minefield
Disintermediation works only when transactions are simple and low-risk. Property is the opposite:
- multi-stage legal requirements
- valuation checks
- loan approvals
- title issues
- deadlines that can void agreements
- SPA clauses that can cost RM10,000–RM100,000
- coordination with banks, lawyers, valuers, tenants, inspectors
One mistake can collapse the deal or create financial loss.
Sellers and developers don’t pay agents for “finding a buyer.”
They pay agents for getting the deal safely to completion. This is why success-based fees work — agents absorb all the effort, cost, and risk. They only earn when they deliver results.
2. The Internet Removed Information Asymmetry — It Did Not Remove Execution Complexity
Yes, listings are online.
Yes, buyers can research prices.
Yes, sellers can post on Facebook.
But:
- data ≠ insight
- information ≠ execution
- exposure ≠ conversion
A seller can list a unit at RM800,000. A skilled agent knows:
- it is RM40,000 above transacted prices
- the owner is under time pressure
- the maintenance fee may increase next year
- buyer demand has dropped due to loan tightening
- similar units are struggling to get valuations
Tech platforms can show listings. They cannot replace judgment, negotiation, or strategy.
3. Agents Sell Outcome, Not Access — Especially When Buyer Demand Shrinks
In Malaysia today, the structural reality is:
There are far more sellers than buyers.
This is why:
- many listings sit for months
- prices are soft
- valuation shortfalls happen more often
- buyers have many options
- sellers compete aggressively for buyer attention
Agents are now hired not for “listing a property,” but for:
- filtering real buyers
- qualifying loan capability
- creating urgency
- repositioning the property
- bringing prospects from their database
- persuading buyers who are undecided
With 10 sellers chasing 1 buyer, the one who uses a strong agent wins.
This is why sellers willingly pay higher commissions. A higher fee is meaningless if the agent can close a transaction that others cannot.
4. Why Developers Removed In-House Sales Teams and Outsourced to Agents
Before MCO, many developers carried large in-house sales teams. After MCO, many cut them entirely.
Why?
Reason A — Salary is a fixed monthly cost, even when sales are zero.
During downturns or slow months, the company bleeds cash.
Reason B — Full-time staff become too comfortable.
They receive a salary whether they close or not. Motivation drops. Effort levels decline. Urgency disappears.
Reason C — Agents work purely on a success basis.
Developers pay RM0 until the unit is truly sold. When sold, the commission is simply added into the pricing strategy.
Instead of cutting prices (which damages brand value), developers:
- keep the selling price
- increase agent commission
- let agents fight for sales through their own marketing budgets
The result: Developers shift risk outward. Agents bring in buyers faster and at lower cost compared to maintaining in-house teams.
5. Direct Dealing Failed Because Negotiation Is Human, Not Digital
Negotiations between buyers and sellers often collapse when done directly. Why?
- sellers overvalue
- buyers lowball
- emotions flare
- egos clash
- misunderstandings escalate
- nobody acts as a stabilizer
Agents serve as:
- buffers
- mediators
- tacticians
- translators
- protectors of the deal
Apps cannot replicate this. Algorithms cannot defuse human emotion.
6. FSBO (For Sale By Owner) Failed Worldwide for the Same Reasons
Direct sellers struggle because they:
- misprice
- attract unqualified buyers
- lack marketing assets
- cannot filter loan-rejected prospects
- mishandle SPA processes
- fail negotiations
- lose the buyer half-way
Data shows FSBO units typically:
- sell slower
- sell below fair market value
- collapse more frequently during the legal process
The dream of cutting out the agent never matched reality.
7. Rising Commissions Are Not a Sign of Agent Power — They Are a Sign of Transaction Difficulty
Developers and sellers are not paying more because they love agents. They are paying more because:
- buyers are fewer
- competition is intense
- discounting damages brand value
- agents are the only scalable external sales force
- marketing costs have shifted from developers to agents
- success-based compensation aligns incentives perfectly
A RM30,000 commission is nothing compared to holding costs, bank interest, and unsold stock risk.
The Market Has Spoken: Tech Didn’t Replace Agents — It Exposed the Weak and Rewarded the Strong
The internet removed:
- agents who only opened doors
- agents who relied on outdated methods
- agents who could not negotiate
- agents who could not manage risk
But it strengthened:
- digitally skilled agents
- data-driven agents
- negotiation specialists
- transaction managers
- high-performance teams
Real estate didn’t lose agents. It upgraded them.
Conclusion: Real Estate Can Never Fully “Cut Out the Middleman” — Because the Middleman Manages the Risk
You can replace:
- a CD store
- a travel agent
- a taxi dispatcher
But you cannot replace the professional who:
- negotiates RM500,000 to RM2 million decisions
- manages legal documents
- coordinates multiple parties
- filters genuine buyers
- protects clients from costly mistakes
- brings buyers from a shrinking pool
- sells outcomes, not listings
In real estate, the transaction is too complex, too emotional, and too high-stakes. That is why, even in the digital age:
Agents are not disappearing. They are becoming indispensable. And success-based commissions will continue to rise.
