Mobilizing Children to Raise Sister-in-Law's Apartment Price... Real Estate Agent Gained Over 100 Million Won

Full Survey of 710,000 Transactions Reveals 12 Cases
Licensed Realtors and Assistants Involved in Price Manipulation
Apartment Prices Soar After Some Complexes' Self-Transactions
However, Violations Are Minor in Overall Transactions

[Image source=Yonhap News]

'Bicycle transactions with false contracts and tax evasion...'

It has been revealed that suspicions of apartment transaction price manipulation raised in the market are actually occurring in many cases. Government investigations have confirmed for the first time cases where real estate market participants such as licensed real estate agents, brokerage assistants, and sales agency employees gained unfair profits worth hundreds of millions of won through false transactions. In some areas, apartment prices rose by up to 54% compared to previous levels due to such transaction price inflation, causing significant market damage.

On the 22nd, the Ministry of Land, Infrastructure and Transport announced the results of a 'Real Estate Transaction False Reporting Special Investigation' conducted by its internal organization, the Real Estate Transaction Analysis Planning Team. The team conducted a full investigation of over 710,000 apartment transaction registration certificates from February 21 to December 31 of last year, a period when reporting contract cancellations became mandatory, and identified 2,420 suspected cases of 'false contracts' where ownership transfer registration was not applied for even 60 days after the final payment date.

The government conducted additional real transaction investigations on 821 cases in regulated areas such as Seoul, where specific individuals repeatedly participated in multiple new high-price transactions and then canceled them. As a result, a total of 69 suspected violations of laws were confirmed, including 12 transactions suspected to be bicycle transactions and false reports.

From False Reporting to Bicycle Transactions

This investigation revealed for the first time cases where licensed real estate agents fabricated completed transactions to gain unfair profits and influence market prices. According to the Ministry of Land, in the case of Agent A, in June last year, a purchase report was made under his daughter's name for his sister-in-law's apartment valued at 240 million won at 315 million won, then canceled in September, and again reported a purchase under his son's name at 350 million won in November.

During this process, neither the daughter nor the son had contracts, nor were any deposits exchanged. Afterwards, Agent A brokered the apartment to a third party for 350 million won, and the sister-in-law gained 110 million won more than the market price. The Ministry judged this as a suspected bicycle transaction since the previous transaction was immediately canceled once the son's contract was made.

Brokerage Assistants and Sales Agency Employees Also Involved

In the case of Brokerage Assistant B, in September last year, a purchase report was made under his own name for an apartment valued at 50 million won at 79.5 million won, then brokered to a third party at the same price within the same month. Once the contract was made, his previous transaction was canceled. Due to Assistant B's false contract, the homeowner gained an additional profit of 29.5 million won above the market price within a month. The Ministry regards all these acts as illegal activities involving bicycle transactions and false reporting.

There were also indications of false transaction involvement by sales agency employees. The sales agency owned two apartments valued at 228 million won each, which were reported as purchased by the company's CEO and an internal director at 299 million won and 304 million won respectively, then sold to two third parties at similar prices, gaining 130 million won more than the market price. Neither the internal director nor the CEO had contracts or exchanged deposits.

Apartment Prices Rose Up to 54% in Some Areas

The Ministry's investigation also confirmed that apartment prices surged due to bicycle transactions. In Namyangju D Complex, prices increased by about 17% on average in 28 transactions conducted since the bicycle transactions. In Cheongju E and F Complexes, apartment prices rose approximately 54% and 29%, respectively, after bicycle transactions.

The Ministry plans to respond strictly as the investigation confirmed widespread illegal activities. The 2,420 suspected false reporting transactions and 69 suspected law violations will be referred to the National Police Agency for investigation, and suspected tax evasion cases will be reported to the National Tax Service for collection procedures. Kim Soo-sang, Director of the Housing and Land Office at the Ministry, emphasized, "We will actively crack down on market disruption by some speculative forces to establish a market order centered on actual demand."

However, some argue that the scale of detected cases is insignificant compared to the total transaction volume. Eun-hyung Lee, Senior Researcher at the Korea Construction Policy Institute, explained, "When dividing the 2,420 suspected false reporting transactions and 69 suspected law violations by the total 710,000 transactions, the rates are about 0.34% and 0.009%, respectively. While market disruption is certainly a social evil, it should not be overinterpreted as the cause of housing price increases and rental crises."