By Dato’ Mani Usilappan
In the ever-evolving Malaysian property landscape of 2026, the structural integrity of the real estate market relies on a delicate system of checks and balances. On one side, the estate agency sector acts as the engine of growth, driving transactions and facilitating ownership. On the other hand, the valuation profession serves as the essential brake, ensuring that the engine does not propel the market into a speculative void. However, recent trends have revealed a growing friction between these two pillars, where the pressure of commissions and indicative values threatens to compromise professional ethics.
The primary function of an estate agent is to act as an ethical intermediary, matching buyers with sellers to conclude a transaction. Yet, the current environment in Malaysia is characterised by hyper-competition. With over 70,000 real estate negotiators (RENs) active in the market, the race to secure a commission has led to an at any cost mentality in some quarters.
For many buyers, particularly first-time homeowners or those looking to expand their portfolios in the wake of the 2025-2026 economic boom, the availability of financing is the ultimate deal-breaker. Most purchasers lack the requisite 10% to 20% cash deposit and are easily swayed by zero down-payment or cash-back offers. To make these deals work, the property must be valued significantly higher than its actual selling price to satisfy Bank Negara Malaysia’s (BNM) Loan-to-Value (LTV) restrictions.
Pricing engineering: A growing threat
Market intelligence suggests that pricing engineering has become a sophisticated art form in the secondary market. Agents often orchestrate a series of high-priced transactions within a single development to manufacture a new price benchmark.
Once a few units are recorded at an inflated price in public databases, the agent can then persuade subsequent buyers and lenders that this is the new normal. This practice creates a false floor for values, effectively trapping the valuer in a web of engineered data that is increasingly difficult to rebut.
The valuer’s dilemma
Valuers play a vital role in the lending process. Their determination of market value is the anchor for millions of ringgit in bank disbursements. However, a systemic practice is undermining this entire foundation: the indicative value request.
Currently, bankers and agents often approach valuers with nothing more than a property address and a target price, asking for a verbal indication of whether that value can be supported. This happens before a formal inspection, before a title search and before any deep market analysis.
In practice, the indicative value process has devolved into a bidding war. For example, if Valuer A gives an indication of RM450,000 but the agent needs RM500,000 to close the deal, the agent will move to Valuer B. The valuer who provides the highest indication is more often rewarded with the formal Letter of Instruction (LOI). This creates a dangerous anchor effect. Once a high verbal indication has been given, the valuer finds himself professionally locked in. If a physical inspection later reveals that the unit is in poor condition or faces a restrictive Malay Reservation title that lowers its value, the valuer faces intense administrative pressure. Banks are often reluctant to amend loan paperwork once it has been processed based on the initial indication and the valuer faces risks with the financial institution if the final value is different from the indicated value.
Legal repercussions
The judiciary has not turned a blind eye to these imprudent commercial practices. In the landmark case of Bank Islam Malaysia Bhd vs Mohd Nasir bin Saat, the court issued a stern warning to the industry. The judge remarked that the practice of approving a loan amount before instructing a proper valuation is not only unethical but constitutes imprudent commercial practice.
Despite such high-level warnings, the sales-first culture within many banking institutions has persisted into 2026. Valuers are still being pitched against one another and indicative values are still being treated as final numbers by bank lending departments. Recent court decisions, such as the 2025 ruling against a panel firm for overvaluing a property by over 100% (RM2.2mil vs a true value of RM900,000), serve as a grim reminder that when the loan goes sour, the valuer is often the first to be sued for negligence.
The professional cost
The pressure on valuers to match the price has broader implications for the profession. Whilst in the past when valuers had been alluded to as being pessimistic in their opinions, the pressure to match higher asking prices hits at the heart of professional independence and integrity. It may encourage unhealthy attempts at reengineering values. Furthermore, the integrity of the profession is under threat from:
Reclaiming professional sovereignty
For the Malaysian property market to remain Asean’s silver medallist, the relationship between agency and valuation must be recalibrated. The current practice of value-shopping destroys the credibility of the entire real estate ecosystem.
The strategy to overcome these abuses is clear. We must eliminate the reliance on verbal indicative values and return to a system where professional reports are the starting point for lending, not an afterthought. Only by empowering valuers to speak the truth, unencumbered by the pressure of the agent’s commission, can Malaysia ensure that its property sector continues to rise on a foundation of reality, rather than an illusion of value.
This commentary is the second of a 4-part series contributed by the Association of Valuers, Property Managers, Estate Agents and Property Consultants in the Private Sector, Malaysia (PEPS). The link to part 1 is here.
Source: StarProperty.my
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