Is This a Turf War? 100,000-Member Realtors Association Pressures Local Governments to Shut Down Direct Transaction Boards [Real Estate AtoZ]

Using Private Sector Guidelines to Pressure Local Governments
Jeju, Gwangyang, and Others See 'Domino Effect' of Direct Transaction Closures
Criticism Mounts Over "Infringement on Consumer Choice"
Number of Licensed Agencies Drops Below 110

The Korea Association of Realtors (hereinafter referred to as the Association), which has around 100,000 members, has begun pressuring local governments to halt real estate direct transaction services operated by municipalities. The Association claims that its intention is to prevent fraud that could arise during direct transactions. However, criticism has emerged that the Association is overreaching by urging local governments to apply government guidelines originally created for private platform companies. Some argue that, faced with an unprecedented downturn, the brokerage industry is infringing on consumer choice in order to protect its own interests.

Applying Private Sector Standards to Public Services... Controversy Over 'Administrative Interference'

The building of the Korea Association of Realtors in Bongcheon-dong, Gwanak-gu, Seoul. Korea Association of Realtors.

According to the real estate industry on January 21, the real estate direct transaction bulletin boards on the websites of three local governments-Jeju Special Self-Governing Province, Gwangyang City, and Hwasun County in South Jeolla Province-were recently shut down. The Association cited the risks of unlicensed brokerage and rental fraud as grounds for closure, and the local governments accepted this reasoning. Jeju Province stated, "We determined that operating a direct transaction bulletin board could actually pose risks to the safety of local residents," while Gwangyang and Hwasun provided similar explanations for their decisions.

The Association used the "Guidelines for Operating Real Estate Direct Transaction Platforms," announced by the Ministry of Land, Infrastructure and Transport in February of last year, to pressure local governments. These guidelines recommend real-name verification and property listing authentication to prevent false listings and fraud on private platforms such as Danggeun Market. A Ministry official explained, "The guidelines were designed to encourage voluntary compliance by private companies." In effect, standards meant for private companies were inappropriately applied to public bulletin boards intended for residents' convenience.

Industry analysts say that local governments accepted the Association's demands despite the controversy because of concerns over administrative liability. A real estate industry official commented, "Although the bulletin boards specify that individuals are responsible for any incidents, local governments likely feared they would be blamed if something did happen. Furthermore, the influence of the Association, which has strong local organizations in each city, county, and district, cannot be ignored."

Closures Outpace Openings... The Brokerage Industry's 'Struggle for Survival' on the Brink

The backdrop to the Association's scrutiny of even low-profile municipal bulletin boards and its push for closures is the ongoing downturn. According to data from the Association, there were 9,982 real estate brokerage closures nationwide from January to November last year. During the same period, there were only 8,211 new openings. When adding the 1,152 temporary suspensions of business, the number of brokerages closing each month exceeds 1,000. With real estate transaction volumes plummeting, small-scale agencies are struggling to pay rent, and direct transactions have emerged as a significant obstacle to their livelihoods.

The pressure to close municipal direct transaction sites has also drawn attention because it coincides with the Association's push to become a statutory organization, which is awaiting passage in the National Assembly. The proposed amendment does not include so-called "toxic provisions" such as the right to supervise or enforce regulations. However, the proptech (property + technology) industry predicts that, once the bill is passed, the Association will seek to regain such authority.

A proptech industry official stated, "Many innovative startups have already been forced out of the market due to pressure from the established brokerage sector. If the Association becomes a statutory organization and launches a full-scale offensive, consumer choice in services will be further restricted."