[Beginner's Guide to Real Estate] First Property Contract... 'How Much Should I Pay for Brokerage Fees?'

There is a legally established 'compensation cap'... Negotiations are decided within the limit
Maximum 0.9% for housing sales, maximum 0.8% for leases
Non-residential officetels are 0.9%... but leases can be 0.4% if conditions are met

[Asia Economy Reporter Lee Chun-hee] When you become a real estate reporter, you sometimes get unexpected KakaoTalk messages from friends. "How do I apply for a housing subscription?" "What is first priority?" For the 2030 'Burin-i (Real Estate + Beginner)' who only have subscription savings accounts created by their parents when they were young, I am going to create a guide.

After becoming independent from their parents and looking for a new home, some Burin-i may worry about "how much should I pay as a commission to the real estate agent who helped me find the house?"

In fact, there is no need to worry much. It is already legally regulated. According to current law, licensed real estate agents must post a table showing how much brokerage fee they will charge, along with their real estate license, inside their office. You can check this "Housing Brokerage Fee Rates and Limits" table and pay the brokerage fee at or below the maximum amount set by agreement.

▲ Housing Brokerage Commission Rate Table Based on Seoul (Provided by Korea Association of Realtors)

◆ Up to 0.9% for sales, 0.8% for leases= Brokerage fee rates are set by ordinances of each metropolitan local government. Taking Seoul as an example, if the sale or exchange price of a house is less than 50 million KRW, the maximum fee is set at 0.6% of the transaction amount or 250,000 KRW. For example, if you purchase a house worth 45 million KRW, 0.6% is 270,000 KRW, but since the limit is 250,000 KRW, you only need to pay up to 250,000 KRW. This amount is the maximum, so it can be negotiated lower, but usually the fee is paid based on this maximum rate table.

Currently, for sales and exchanges, the limits are ▲less than 50 million KRW: 0.6% or 250,000 KRW ▲less than 200 million KRW: 0.5% or 800,000 KRW ▲less than 600 million KRW: 0.4% ▲less than 900 million KRW: 0.5% ▲900 million KRW or more: 0.9%. For leases, the limits are ▲less than 50 million KRW: 0.5% ▲less than 100 million KRW: 0.4% ▲less than 300 million KRW: 0.3% ▲less than 600 million KRW: 0.4% ▲600 million KRW or more: 0.8%.

But while sales are simply calculated based on the transaction amount and jeonse (key money deposit) leases are based on the deposit, how about monthly rent contracts where both deposit and rent apply? In this case, the basis is the sum of the deposit plus the monthly rent multiplied by 100. For example, if you sign a contract with a 50 million KRW deposit and 1 million KRW monthly rent, the basis is '50 million KRW + (1 million KRW * 100)' which is 150 million KRW, and the maximum brokerage fee at 0.3% rate is 450,000 KRW.

However, for high-value transactions, since there is no separate limit and fees are proportional to the transaction amount, brokerage fees naturally increase in a rising market like recently. For example, in October last year, a transaction of an 84㎡ unit at 'Acro River Park' in Seocho-gu for 3.4 billion KRW had a maximum brokerage fee of 30.6 million KRW. Considering that fees can be charged to both parties, it can go up to 61.2 million KRW.

But with the median apartment price in Seoul approaching 900 million KRW, there are criticisms that setting the highest bracket as '900 million KRW or more' is too broad. Naturally, various startups boasting IT technology have emerged. Representative examples are JipTos and Darwin Brokerage, which offer 'low commission, high volume' services by charging fees to only one party or discounting the other party's fee.

▲ Interior view of an officetel

◆ Different standards apply to officetels= Then, what about brokerage rates for officetels, which Burin-i often contract? The brokerage fee rates mentioned earlier are all based on housing. However, officetels are not considered housing under the Building Act. According to current law, brokerage fees for real estate other than housing are to be negotiated below 0.09%.

But this causes a maximum brokerage fee difference of up to three times between housing and officetels with the same deposit. For a 200 million KRW deposit, the fee for housing is up to 600,000 KRW, but for officetels, it would be 1.8 million KRW.

Therefore, there is a separate provision for officetels. If the officetel is residential with a net floor area of 85㎡ or less and equipped with a kitchen and bathroom, the maximum brokerage fee is 0.5% for sales and 0.4% for leases. In this case, the fee for 200 million KRW would be reduced to up to 800,000 KRW.