The Anti-Corruption and Civil Rights Commission to Conduct Public Preference Survey on Real Estate Brokerage Fees Until the 8th of Next Month

Real estate issues shook South Korea in 2020. Contrary to President Moon Jae-in's confident assertions about resolving real estate problems, it was a year marked by growing public frustration over homeownership. The government announced 24 policies to curb the volatile housing prices, but each time, prices continued to rise. The last shantytown in Gangnam, Seoul, Guryong Village, stands in stark contrast to the dazzling high-rise apartments. In the New Year of the Year of the Ox, there is hope for stabilization in the housing market. Photo by Moon Honam munonam@

[Asia Economy Reporter Moon Chaeseok] The Anti-Corruption and Civil Rights Commission (ACRC) announced on the 27th that from the 28th of this month to the 8th of next month, it will conduct a public preference survey on "Improvement Measures for Housing Brokerage Fees and Brokerage Services" on the ACRC's public opinion platform.

The results of this survey will be reflected in the final plan, which is scheduled to be recommended to the Ministry of Land, Infrastructure and Transport and 17 metropolitan cities and provinces between January and February next year.

The survey will be conducted by asking licensed real estate agents and the general public separately about their preferred improvement plans for the brokerage fee rate system.

Five proposals, which were shared with the Korea Association of Realtors, the Consumer Organizations Council, and others, will be presented.

The five proposals are: ▲ a method utilizing progressive differential fees by transaction segment ▲ a mixed method combining progressive differential fees by transaction segment with negotiated upper and lower limit rates on the excess portion ▲ a single rate system conversion with no distinction by transaction amount, setting sales at 0.5% or less and rentals at 0.4% or less ▲ a single rate system conversion with a 0.3% cap on brokerage fees regardless of transaction amount or sales/rental distinction ▲ granting licensed real estate agents the authority to determine the party responsible for brokerage fees and to apply differential charges, while reflecting market conditions and deciding through consultation with consumers within an upper and lower limit rate range (0.3% to 0.9%).

The current scope of brokerage services is legally limited to confirming and explaining the brokerage target, verifying the owner, and preparing the transaction contract. From the perspective of licensed real estate agents, they can only provide the same brokerage services to all consumers regardless of the transaction amount.

There have also been complaints that if the final transaction contract is not concluded, they do not receive any brokerage fees.

In this regard, the ACRC proposed two improvements to brokerage services. These will also be conducted by asking licensed real estate agents and the general public separately for their opinions.

The two proposals are: ▲ establishing new regulations on the scope of additional services that consumers can choose beyond existing brokerage services and the basis for fee calculation ▲ establishing new regulations on brokerage referral fees (within the limit of actual cost compensation based on the number of referrals of brokerage targets in the brokerage contract) when the final transaction contract is not concluded.

Chairperson Jeon Hyun-hee of the ACRC said, "As housing prices and jeonse prices have risen significantly, the issue of brokerage fees has emerged as a social issue. The ACRC, as a mediator of social conflicts, will listen to the diverse opinions of the public and present progressive directions."

Previously, from the 2nd to the 13th of last month, the ACRC collected public opinions on the theme "Housing Brokerage Services, Problems and Improvement Measures." On the 16th of last month, an online forum was held with real estate experts, the Korea Association of Realtors, and the Consumer Organizations Council in attendance.

According to a recent survey conducted by the ACRC targeting licensed real estate agents and the general public, 28.4% of respondents answered that the appropriate brokerage fee rate for housing prices exceeding 900 million KRW is 0.5% to 0.6%. Currently, the upper limit rate of 0.9% is applied.

Last month, the average sale price of small to medium-sized apartments in Seoul (exclusive area over 60㎡ to 85㎡ or approximately over 18.15 pyeong to 25.7125 pyeong) was 900.729 million KRW. The average apartment price for ordinary citizens living in Seoul has far exceeded 900 million KRW, but the brokerage fee rate system sharply increases for prices above 900 million KRW.

Because of this, there are criticisms that the current brokerage fee system is causing price distortion phenomena that fail to keep up with the soaring housing prices.

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