Due to Real Estate Overheating and Surge in Brokers... Flat-Rate Brokerage Fee of 1 Million Won Emerges

Following Songpa Helio City
Atmosphere of commission reduction in joint brokerage
Political circles push for legal amendment
Ministry of Land prepares commission reform

[Asia Economy Reporter Donghyun Choi] Controversy surrounding real estate brokerage fees continues, but attention is being drawn as brokerage offices that have significantly lowered their fees are appearing in various parts of Seoul, including the Gangnam area. With the number of licensed real estate agents reaching 450,000 and competition intensifying, there are forecasts that price competition will become full-fledged.

According to the industry on the 23rd, A Licensed Real Estate Office (licensed) located in the commercial area within the 9,510-unit Helio City complex in Garak-dong, Songpa-gu, Seoul, is recently charging only 0.1~0.19% for apartment sales commissions. For jeonse and monthly rent commissions, a flat rate of 1 million KRW is applied regardless of price. Considering that the market price for an 84㎡ exclusive area in this complex is about 2 billion KRW, the current Seoul brokerage fee system allows a maximum of 18 million KRW, but this office’s highest fee is about 3.8 million KRW. The representative of A Licensed said, "By lowering the fees, the average daily transaction volume increased to about three cases, and profits have improved significantly," adding, "We offer low fees not only in this complex but also in nearby Gyeonggi areas."

Nearby brokerage offices also seem to be joining the competition. Brokerage offices within the complex are reluctant to disclose fees, citing negotiations with customers, but recently some offices have declared they will charge only 0.2% for sales commissions. The representative of A Licensed said, "At first, there were protests from nearby brokers, but recently they have also been significantly lowering their fees," adding, "As popularity increased, some have even proposed joint brokerage."

Not only in Gangnam but also in relatively stable demand areas such as Mok-dong in Yangcheon-gu and Junggye-dong in Nowon-gu, famous for their academies, cases of significantly lowering fees are increasing. Jeon Mo (35), who recently purchased a newlywed home in Mok-dong, said, "At first, they naturally quoted the maximum rate, but eventually we agreed on 0.5%," adding, "Since apartment prices have soared so much, even lowering fees does not reduce profits significantly." A representative of C Licensed in Mok-dong said, "After the revised Lease Protection Act was implemented, house prices soared to the point that even brokers felt sorry, so we lowered fees to the minimum for jeonse only."

The structural factor behind the possibility of such low brokerage fees is the rapid increase in the number of brokerage offices. According to the Korea Association of Licensed Real Estate Agents, as of July, there are about 450,000 licensed real estate agents nationwide, of which about 110,000 have registered offices and operate brokerage businesses. This year’s licensed real estate agent exam saw a record number of 343,076 applicants, with 16,554 passing.

Concerns about excessive brokerage offices have also prompted political responses. On the 11th, 10 members of the People Power Party, including Representative Ha Young-je, proposed a partial amendment to the Licensed Real Estate Agent Act, which introduces a relative evaluation system for the licensing exam. Within a week of the legislative notice starting on the 15th, over 1,000 comments have already been posted on the National Assembly bulletin board explaining the bill. While some support the introduction of a relative evaluation system to improve the quality of brokerage services, opposing voices argue it is just brokers protecting their own interests.

The Ministry of Land, Infrastructure and Transport also plans to conduct a survey soon, including commissioning research, to reform the brokerage fee system for the first time in six years. This is a follow-up measure after the Anti-Corruption and Civil Rights Commission recently recommended the Ministry improve the brokerage fee calculation system. The survey will investigate the actual fee rates applied in the market, the proportion of contracts made through brokerage offices among all sales contracts, and the average monthly income of brokerage offices in detail. A Ministry official said, "A comprehensive review of the entire real estate brokerage industry is necessary," adding, "We are closely monitoring the market."

This content was produced with the assistance of AI translation services.