'Half-Price Brokerage Fee' Startup Reported Again by Licensed Real Estate Agents Association

Report Filed Against Brokerage Firm Promoting 'Free for Sellers, Half-Price for Buyers'
Accused of Similar Names, Illegal Brokerage, but Mainly for Deterrence
Similar Case Against Jiptos in 2018 Also 'No Charges'
Association: "Disrupting Real Estate Order" vs. Firm: "No Illegal Activity"

[Image source=Yonhap News]

[Asia Economy Reporter Moon Jiwon] The debate over half-price real estate brokerage fees is showing signs of reigniting. This is because the Korea Association of Realtors has filed a complaint with the prosecution against a real estate brokerage platform startup that promotes "half-price brokerage fees." Although the nominal reason is a violation of the Licensed Real Estate Agents Act, such as the use of similar names, it is analyzed that the real purpose is to curb the startup's move to lower brokerage fees.

According to the industry on the 31st, the association recently filed a complaint with the Suwon District Prosecutors' Office against brokerage firm A, headquartered in Seongnam, Gyeonggi Province, on charges of violating the Licensed Real Estate Agents Act. An association official explained, "We have conducted several thorough on-site inspections to investigate disruptive acts in real estate transactions and illegal business practices in the metropolitan area and other regions," adding, "As a result, multiple illegal acts by brokerage firm A were confirmed."

The association claims that this company disrupted the order of real estate transactions by engaging in unfair business practices, illegal advertising, and the use of similar names. Real estate advertising should be done by brokerage firms or licensed real estate agents, but this company advertised under a general corporate name. It is also alleged that they advertised before registering the brokerage office and engaged in illegal brokerage activities.

However, the brokerage industry views the actual purpose as blocking this company's half-price brokerage fees. In fact, this company operates a platform that connects sellers and buyers, lowering brokerage fees to about half of the legal limit, which has drawn opposition from local brokerage offices.

By using this platform, sellers listing their homes do not pay any fees, and buyers searching for homes pay only about 50% of the average brokerage fee. Currently, the company operates mainly in apartment complexes in Gyeonggi Province, including Bundang in Seongnam, Suji in Yongin, and Gwanggyo in Suwon.

Previously, in 2018, the association also filed a complaint against Jiptos, which provided a similar service. Jiptos gained attention by charging only landlords fees while not charging tenants, mainly brokering one-room and two-room rentals around university areas in Seoul. At that time, Jiptos was cleared of charges due to insufficient evidence during the prosecution investigation.

On the contrary, an association executive who led the complaint was fined 2 million won in the first trial for charges of obstruction of business and trespassing after conducting a covert crackdown at Jiptos' office in Gwanak-gu, Seoul.

Some argue that amid ongoing complaints about excessively high brokerage fees, the association is making unreasonable complaints to protect its "turf." Brokerage firm A is also known to have faced protests from many brokerage offices during its early business stages. A representative of brokerage firm A stated, "We will formally review the complaint after receiving it," adding, "There is no problem as we underwent legal review before starting the service."