Go to contents

Disproportionate real estate brokerage fee

Posted November. 18, 2019 07:24,   

Updated November. 18, 2019 07:24


The real estate brokerage fee rates in Seoul for the maximum price transactions – 900 million won for sales and 600 million won for lease – are set at 0.9 percent for the former and 0.8 percent for the latter. These standards were determined in 2014. Previously, a system that applied the highest brokerage fee rates for sales transactions over 600 million won and lease contracts over 300 million won had been in place for 15 years.

Meanwhile, apartment unit prices in Seoul have been rising in steps for the past few years – stalling for a while with the introduction of strict policies to stabilize real estate prices and rising rapidly as if to close the gaps afterward. As a result, 900-million-won real estates are no longer the standard for high-priced ones, unlike in 2014. As of the announcement of new measures on September 13, 2018, over 26 percent apartment units in Seoul were priced at 900 million won or higher. In addition, around 16 percent of lease contracts concluded in the third quarter of this year were over 600 million won. Brokerage fees in the former case may not be a huge issue if negotiating well as there would be only a few sales transactions in a person’s lifetime. However, in the latter case, brokerage fees are a big burden for consumers who need to frequently move depending on real estate prices.

Real estate transactions are not the only area that requires reasonable adjustment due to changing sizes. According to the Act on the Aggravated Punishment, etc. of Specific Economic Crimes, the highest threshold of the aggravated punishment for embezzlement, misappropriation, etc. is five billion won. This figure has not changed for 36 years since its first enactment in 1983. The criteria for embezzlement and misappropriation are ambiguous and the threshold itself is disproportionately low in the times when large companies make investments wroth several trillion won per year. There would be more cases with such disproportionateness. Relevant criteria must change.