"Zigbang Boycott"... Real Estate Agents Angry Over Apartment Brokerage Expansion

Zigbang Demands Half Brokerage Fee Despite Not Being Direct Brokerage
"Competition is Already Fierce"... Frontline Agents Oppose
Association and Zigbang Discuss Conflict Resolution... No Solution Yet
Consumer Convenience May Improve if Zigbang Enters Brokerage Business

[Asia Economy Reporter Moon Jiwon] The opposition from licensed real estate agents is increasingly spreading over the entry of the real estate platform 'Zigbang' into the apartment direct brokerage market. Recently, as brokerage corporations offering "half-price brokerage fees" have expanded their businesses and competition has intensified, the declaration of direct brokerage entry by a major real estate platform company has heightened the sense of crisis among existing frontline licensed real estate agents. Moreover, with the government preparing reform plans to lower brokerage fees, the growing pains surrounding changes in the real estate brokerage market are expected to continue for the time being.

Direct Brokerage: 'Innovation vs. Infringement on Local Businesses' Controversy

The conflict intensified when Zigbang, the nation's number one real estate transaction brokerage platform, announced its intention to enter apartment direct brokerage. Recently, Zigbang CEO Ahn Seong-woo presented a new proptech model called 'Ontact Partners' and revealed a cooperation model with licensed real estate agents. Consumers can tour listings using virtual reality (VR) and 3D technologies developed by Zigbang, and when signing contracts, both the licensed real estate agent and Zigbang’s brokerage subsidiary jointly affix their seals. Zigbang is not merely providing a platform but participating in joint brokerage. They take responsibility for contract details and split brokerage fees equally with the agents.

Previously, many in the brokerage industry viewed Zigbang’s entry into the brokerage market as a matter of 'when, not if.' Earlier this year, Zigbang posted a job announcement seeking employees with licensed real estate agent certifications, raising suspicions that they were preparing to enter the brokerage market. Since launching its service in 2010, Zigbang has grown rapidly, but recently its annual revenue has stagnated around 40 billion KRW, leading to widespread analysis that discovering new revenue models is urgently needed.

Frontline Brokers: "They Grew Thanks to Us... Now Taking Our Livelihood"

Brokers are strongly opposing Zigbang’s business expansion. On social networking services (SNS) where brokers gather, voices calling for stopping advertisements on Zigbang and starting a boycott campaign are increasing. One broker claimed, "The platform company we helped grow through our advertisements is now entering brokerage, threatening the survival rights of brokers." Another broker said, "With Zigbang’s information power and financial resources, brokers’ positions will shrink. We need to foster Hanbang immediately." Hanbang is a real estate brokerage platform created by the Licensed Real Estate Agents Association.

Brokers argue that Zigbang’s claim that it is not directly entering brokerage and that brokerage fees will be split in half is nonsensical. One broker said, "Zigbang’s information providers are licensed brokers nationwide, and only if they continuously update new listings can Zigbang operate its business. Advertising fees are increasingly burdensome, and splitting brokerage fees 50% is excessive." Another broker emphasized, "When delivery applications tried to raise commissions, self-employed people nationwide were outraged, but Zigbang’s logic is to take half of the profits."

Both the Association and Zigbang in a Difficult Position... Efforts to Find Solutions

As opposition from brokers grows, Zigbang is also in a difficult position. If relations with brokers deteriorate, existing revenues could be affected. CEO Ahn Seong-woo recently visited the Licensed Real Estate Agents Association to discuss and negotiate the direction of the business. An industry insider explained, "Zigbang wants to catch both rabbits?the existing advertising model and the new cooperation model?but it is expected to be difficult."

The Licensed Real Estate Agents Association is considering filing a complaint with the Fair Trade Commission, as the expansion of profit-making activities using brokers’ information by Zigbang could harm small-scale brokers. However, since many brokers operate through Zigbang, the association has decided not to organize a boycott or similar collective actions. There is also concern that a boycott could lead Zigbang to counterattack for violating the Fair Trade Act. An association official said, "We are currently investigating how Zigbang conducts brokerage."