[Ryu Taemin's Real Estate A to Z] Is Proptech Brokerage Fee Really 'Half Price'?

Darwin Trading Fee 0.3% for Under 900 Million Won... Reduced to 0.35% for Over 900 Million Won
No Difference in Mid-Low Price Transactions but Half Fee for High-Price Homes
Preferred Benefits Halved Compared to All Segment Reform Plans

[Asia Economy Reporter Ryu Tae-min] Friction appears to be intensifying between licensed real estate agents and proptech companies over real estate brokerage fees. Since last month, a reform plan to reduce brokerage fees has been implemented, followed by real estate platforms consecutively promoting "half-price fees." In particular, real estate platforms are attracting consumer attention by offering various benefits to enhance their competitiveness.

From the 19th of last month, the Ministry of Land, Infrastructure and Transport's revised enforcement regulations of the Licensed Real Estate Agents Act came into effect. The core of the revision is to lower the maximum brokerage rates starting from transactions of 600 million KRW or more for sales and 300 million KRW or more for leases. For sales, the maximum rates are reduced as follows: for transactions between 600 million and 900 million KRW, from the current 0.5% to 0.4%; between 900 million and 1.2 billion KRW, from 0.9% to 0.5%; between 1.2 billion and 1.5 billion KRW, from 0.9% to 0.6%; and for transactions over 1.5 billion KRW, from 0.9% to 0.7%. For example, the brokerage fee for an 800 million KRW transaction is up to 3.2 million KRW, and for a 1.5 billion KRW transaction, up to 10.5 million KRW.

Following the implementation of the reform plan, proptech brokerage firms are also lowering their fees one after another. In the case of Darwin Brokerage, operated by Darwin Property, the fixed rate for sales transactions between 200 million and 900 million KRW has been reduced to 0.3%, and for transactions over 900 million KRW, uniformly to 0.35%. The brokerage fee for an 800 million KRW home transaction with Darwin Brokerage is 2.4 million KRW, and for a 1.5 billion KRW home transaction, 5.25 million KRW. Compared to the Ministry of Land's reform plan, the difference is not significant for low- to mid-priced home transactions, but for high-priced homes, the fee is effectively halved.

Estate Cloud's Udaebbang Real Estate Brokerage Corporation (Udaebbang) offers even lower brokerage fees. Based on fixed rates, the fees are 0.2% for the 200 million to 900 million KRW range, 0.25% for 900 million to 1.2 billion KRW, 0.3% for 1.2 billion to 1.5 billion KRW, and 0.35% for over 1.5 billion KRW, cutting prices in half across all ranges compared to the Ministry's reform plan.

Additionally, proptech companies are enhancing competitiveness by providing various benefits. Darwin Brokerage does not charge brokerage fees to sellers or lessors who list their homes. Udaebbang offers an additional 10% discount on fees when properties are exclusively listed on their platform. For example, if an 800 million KRW home is listed with the additional discount, the fee drops to as low as 1.44 million KRW, which is only 45% of the maximum 3.2 million KRW under the reform plan.

However, since the Ministry's reform plan is based on maximum rates, some voices suggest that the actual fees received by brokers are not significantly different from those promoted by proptech companies. A licensed real estate agent who has been operating an office for 10 years said, "Nowadays, there are so many licensed real estate agents, and most jointly broker the same properties, so competition is fierce, making it difficult to receive even half of the maximum rate fee," adding, "When you calculate the actual fees, they probably do not differ much from the 'half-price fees' that real estate platforms advertise."

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