Valuers, not validators, must lead the charge

For generations, Malaysians have been guided by a deeply ingrained belief in the unwavering value of property. It has long been seen as a secure investment and a tangible symbol of success.

However, a troubling trend is now challenging this conviction: the widespread practice of artificially inflating property prices. This phenomenon, which is particularly rampant in the sub-sale market, is creating a disconnect between a property’s advertised price and its true market value.

A closer look at online property listings for a high-density apartment in Petaling Jaya reveals a stark contrast.

While real estate agents advertise asking prices of between RM150,000 and RM250,000, official transaction records show that similar units are selling for much more, often between RM380,000 and RM420,000.

The discrepancy can be explained by phrases in the advertisements such as 100% loan, RM150,000 cashback or a markup loan available.

These phrases point to a practice of dual pricing, where the purchase price is inflated to enable borrowers to secure a larger loan from the bank. The difference between the inflated loan amount and the actual price owed to the seller is then cashed out by the borrower.

This practice, while not entirely new, is rapidly gaining prominence. Real estate technology platform ESP Global chief executive officer Aldrin Tan highlights the ethical ambiguity of this trend.

He notes that “mark up loans aren’t legal as it is a deliberate act to mislead the bank”.

Interestingly, he points out that this practice initially emerged as a response to growing property unaffordability, with buyers seeking additional funds to cover transaction costs like stamp duty or renovations.

Speaking at a panel discussion on Elevating Trust for a Sustainable Property Market, real estate consultancy Khong & Jaafar managing director Elvin Fernandez noted that this has led to the existence of two prices. He stressed that valuers, who are tasked with providing banks with an accurate market value, must be increasingly vigilant.

Fernandez emphasised that “property is heterogeneous; therefore, valuations can’t be determined by merely comparing one property with another –proper research and due diligence are required to ensure the right valuation is provided to the bank.”

The reality valuers navigate daily

The role of a valuer is far more complex than simply confirming prices. They operate in an environment riddled with challenges that threaten the integrity of the valuation process.

Incomplete or distorted transaction data: Valuers must work with the data available to them but official sale prices can often obscure hidden rebates, incentives or dual contract arrangements.

A skilled valuer must possess the professional judgment to filter out this noise and determine a property’s true market worth. This requires not just technical skill but a strong ethical discipline to resist misleading signals.

Balancing commercial urgency with independence: In a fast-paced market, banks may issue letters of offer based on preliminary estimates.

When the formal valuation is commissioned later, valuers face pressure to work quickly without compromising the thorough scrutiny required. The most effective valuers maintain their independence, ensuring their conclusions are always evidence-based, even when faced with tight deadlines.

Managing visibility and communication gaps: Instructions for valuations are sometimes sent via informal channels, lacking a clear audit trail. When valuers insist on transparent and traceable communication, they are not being difficult; they are safeguarding the credibility of their work and the financial institution that depends on it.

A valuation is not just a piece of paperwork. For banks, it is the most critical safeguard against a poor loan-to-value ratio and the risk of non-performing loans.

For real estate agents, it sets a fair benchmark for transactions.

For regulators, it is the assurance that the market operates on a foundation of truth.

When valuers are empowered to work with full authority, the entire market gains stability. When their independence is eroded, the entire ecosystem absorbs the risk.

In response, some banks are proactively refining their panel management by rotating assignments or commissioning dual valuations for high-risk transactions. While helpful, these measures are not a complete solution.

A more integrated infrastructure that connects all stakeholders in a transparent, accountable workflow is needed.

Industry moves forward

The industry is already taking steps toward self-improvement.

Some firms have begun implementing internal process improvements, such as building dashboards to monitor turnaround times, creating document libraries to cross-check benchmarks and investing in clearer job assignment tracking. Others are establishing structured internal communication policies to reduce misinterpretation and maintain consistency when engaging with clients, agents or bankers.

However, industry-led reform can only go so far.

Stronger regulatory involvement is crucial – not through punitive oversight but by providing enabling tools. This includes more transparent access to transaction data, clearer guidance on audit logging and protocols that protect valuers from being drawn into biased or collusive scenarios.

In this context, technology can serve as a neutral infrastructure to strengthen professional integrity.

ValuationXchange, a new platform, is being introduced as Malaysia’s first property valuation digital workflow platform.

Endorsed by PEPS Ventures, the platform connects valuers, banks and agents in a transparent ecosystem that aligns with real-world workflows.

Infomina Geolytik executive director Joe Thor said: “ValuationXchange was designed to connect agents, banks and valuers in a single, transparent environment. It’s about more than just digitisation. It’s about creating a better experience for all parties while elevating trust and laying the foundation for a more sustainable property market.”

Valuers have consistently demonstrated their adaptability, applying their expertise under shifting market conditions and balancing commercial urgency with their professional duty.

What is needed now is a fundamental alignment between accurate data, transparent processes and the professional space for valuers to deliver objective opinions without commercial distortion.

Valuers are not simply validators of a price. They are the market’s most trusted truth-tellers. The stronger the tools and systems they have at their disposal, the stronger and more stable the entire property market will become.