[2022 National Audit] Kim Du-gwan: "Korea Real Estate Board Neglects Appraisal Validity Investigation"

Appraisal Validity Investigations: 150 Cases in 2019-2020
Only 25 Cases in 2021-2022

[Asia Economy Reporter Koo Chae-eun] It has been revealed that the supervisory function over appraisals conducted by the Korea Real Estate Board is continuously weakening.

According to the office of Kim Doo-kwan, a member of the National Assembly's Land, Infrastructure and Transport Committee from the Democratic Party of Korea, the number of appraisal validity investigations by the Korea Real Estate Board increased from 23 cases in 2017, 27 in 2018, 68 in 2019, and 82 in 2020, but sharply decreased to 16 cases in 2021 and 9 cases in 2022. Under Article 12, Clause 3 of the Korea Real Estate Board Act, the Korea Real Estate Board is authorized to perform tasks prescribed by Presidential Decree to ensure the appropriateness and order of the real estate market, including appraisal validity investigations.

This trend is attributed to the pre-review system implemented in March 2020. Previously, the appraisal validity investigation review committee deliberated on review reports prepared by the responsible personnel; however, since then, the Korea Real Estate Board internally examines the appropriateness of the review reports before submitting them to the review committee.

In 2021, there were 22 pre-review cases for validity investigations, of which 16 proceeded to validity investigations. However, in 2022, although there were 105 pre-review cases, only 9 validity investigations were conducted.

The number of reviews on compensation appraisal reports has also significantly decreased. There have been ongoing criticisms that the number of reviews was already low compared to the number of applications. While 118 and 123 cases were reviewed in 2019 and 2020 respectively, the number of completed reviews dropped to 45 and 43 cases in 2021 and 2022, respectively, reducing to about one-third of previous levels.

Due to the recent public institution innovation plan, the task of reviewing appraisal reports for collateral loans handled by the Korea Real Estate Board is expected to be transferred to the private sector. There are concerns that the Korea Real Estate Board may relinquish its appraisal review duties to a minimal level. Kim Doo-kwan, a member of the Democratic Party of Korea, stated, “Appraisal is a crucial public function that estimates the economic value of real estate and other assets, forming the foundation of economic activities,” and emphasized, “The Korea Real Estate Board must faithfully perform its legally mandated supervisory role over real estate.”

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