"Presented Lower Rates Than Anti-Corruption Commission..."... Boiling Real Estate Brokerage Industry

Conflict Intensifies Over Brokerage Fee Reduction
Complaints of "Shifting Responsibility for House Prices" After Government Proposal Released
Meanwhile, Consumers Say "Government Proposal Is Also Insufficient"

On the afternoon of the 17th, in front of the Ministry of Land, Infrastructure and Transport at the Government Complex Sejong in Sejong City, a participant at the Korea Association of Realtors' press conference opposing the reduction of brokerage fees struck his own head with a beverage bottle, saying, "I feel like committing harakiri."
[Photo by Yonhap News]

Conflicts between the real estate brokerage industry and the government over the revision of brokerage commission rates are intensifying. Despite the Korea Association of Realtors proposing lower rates than those initially suggested by the Anti-Corruption and Civil Rights Commission, voices from the industry are flooding in, calling the government's proposal to lower the maximum rates even further "excessive." There are also criticisms that the government is shifting the responsibility for rising housing prices, caused by policy failures, onto frontline realtors.

According to the brokerage industry on the 18th, the Korea Association of Realtors, a group of licensed realtors, reportedly proposed commission rates lower than the Anti-Corruption and Civil Rights Commission's plan during negotiations held before the Ministry of Land, Infrastructure and Transport and the Korea Research Institute for Human Settlements presented three revision plans. In February, the Commission recommended Plan 2, which applied rates of 0.5% for transactions under 600 million KRW, 0.6% for 600 million to 900 million KRW, 0.7% for 900 million to 1.2 billion KRW, and 0.5% to 0.9% for amounts exceeding 1.2 billion KRW. The Association reportedly proposed maintaining the current rate for transactions under 600 million KRW but suggested rates 0.1 percentage points lower than the Commission’s plan for transactions above 600 million KRW.

As a result, some frontline realtors initially expressed dissatisfaction, saying the Association’s plan was a step backward, but opposition has grown stronger since the government recently unveiled a plan with even lower rates. The Ministry of Land, Infrastructure and Transport presented three options: Plan 1 favoring consumers, Plan 3 favoring realtors, and Plan 2 as a middle ground. Analysts both inside and outside the government believe Plan 2 is likely to be the final decision.

Plan 2 sets rates at 0.4% for transactions between 200 million and 900 million KRW, 0.5% for 900 million to 1.2 billion KRW, 0.6% for 1.2 billion to 1.5 billion KRW, and 0.7% for amounts exceeding 1.5 billion KRW, which is 0.1 percentage points lower than the Association’s proposal for transactions above 600 million KRW. A representative from the Association said, "The Association’s plan was actually lower than the Commission’s, which caused grumbling within the industry, but the Ministry of Land, Infrastructure and Transport has proposed an even lower plan."

The Association has stated that among the three plans, it can accept Plan 3, which is the most favorable to realtors. Plan 3 maintains the current rates for transactions under 900 million KRW, lowers the maximum rate for the 900 million to 1.2 billion KRW bracket from 0.9% to 0.5%, and reduces the maximum rate for amounts exceeding 1.2 billion KRW from 0.9% to 0.7% compared to the current system.

The Ministry of Land, Infrastructure and Transport is reportedly likely to push for Plan 2. Kim Hyung-seok, Director of Land Policy at the Ministry, said at an online forum on "Real Estate Brokerage Commissions and Service Improvement Measures" the day before, "The improvement plans are unlikely to satisfy everyone, but we plan to announce a decision soon without taking too much time," and urged, "Please cooperate with the government’s plan as much as possible."

However, among consumers, there are strong voices calling for rates to be lowered even further than the Ministry’s plan, so additional conflicts are expected regardless of the final decision. Yoon Myung, Secretary-General of the Consumer Citizens’ Coalition, pointed out at the forum, "It is true that the fees are not reasonable and need to be adjusted by the market," and questioned, "Whether fees should vary according to real estate prices is also questionable."

A representative of a brokerage corporation said, "Brokerage commission rates are naturally evolving through market innovation, so this issue could have been left alone," adding, "Although the Association is expressing strong dissatisfaction through hunger strikes and other means, it seems they will reluctantly accept the plan in exchange for concessions such as switching the realtor exam to a relative evaluation system."

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