|Seoul apartments are seen from Namsan. (Yonhap)|
For those selling or buying a house worth more than 1 billion won, real estate agents can receive commissions up to 5 million won, 4 million won down from up to 9 million won, according to new guidelines. For “jeonse” and monthly rent contracts worth also over 1 billion won, agents can demand brokerage fees up to 4 million won, also 4 million won down from up to 8 million won. Brokerage fees in Korea are negotiable with a price ceiling set according to transaction type and value to prevent conflict.
The all-new regulation comes as housing prices have been skyrocketing following government regulations that ironically tried to put a brake on soaring real estate prices, market insiders said. Homebuyers have been under pressure with paying the high premiums that have risen with house and apartment prices.
The ministry requested real estate agencies and local governments fully comply with the new regulations to lower homebuyer’s pressure of paying expensive real estate fees and to prevent any market disorder the change in regulation entails.
Experts are somewhat skeptical about whether the new law brings benefits to the majority of homebuyers.
“The housing contracts of less than 600 million won account for 86 percent of the total transaction. However, the real estate agency fees in those contracts remained unchanged. That means homebuyers outside Seoul and metropolitan cities cannot enjoy the premium cuts,” said Kim In-man, head of the Kim In-man Real Estate Research Center.
In opposition to agents’ commissions being slashed, Korea Association of Realtors said it would file an injunction to the Administrative Court and a constitutional appeal.