[Asia Economy Reporter Ryu Tae-min] Amid the ongoing real estate transaction freeze, Zigbang has introduced an incentive for transactions through its ‘Half-Price Brokerage’ service. For sellers and lessors listing their properties for the first time via Zigbang and Hogangnono, brokerage fees will be charged at only half the usual rate. This move appears to be a direct response to the Korea Association of Realtors (KAR) announcing plans to offer free brokerage services to buyers and tenants.
On the 22nd, at the ‘Rebranding Media Day,’ Zigbang announced a 50% discount policy on real estate brokerage fees. From that day until the end of June next year, partner licensed real estate agents will charge only half of the legally mandated commission rate to sellers and lessors in the metropolitan area who list their properties for the first time on Zigbang and Hogangnono.
This is the first time Zigbang has introduced a ‘Half-Price Brokerage’ service. A Zigbang representative explained, "It is true that existing licensed real estate agents and proptech companies have introduced or expressed intentions to introduce various types of commission discount systems. We are considering ways to provide benefits to consumers while also incentivizing transactions so that both customers and partner licensed agents can achieve a win-win outcome."
On the 22nd, Ahn Sang-woo, CEO of Zigbang, is giving a presentation at the 'Rebranding Media Day.' (Photo by Ryu Tae-min)
This contrasts with the free brokerage service for buyers and tenants promoted by KAR. On the 26th of last month, Lee Jong-hyuk, president of the Korea Association of Realtors, stated at a press conference, "Once we become a statutory organization, we will introduce a U.S.-style exclusive brokerage system and charge brokerage fees only to sellers and lessors," adding, "We plan to provide free brokerage services to tenants and buyers, who are the weaker parties in real estate contracts."
Recently, conflicts between KAR and Zigbang have reignited over the so-called ‘Zigbang Ban Act.’ On the 4th of last month, Kim Byung-wook, a member of the Democratic Party of Korea, introduced the ‘Partial Amendment to the Licensed Real Estate Agents Act,’ which designates the association as a statutory organization and mandates that licensed real estate agents seeking registration must join the association.
Proptech companies have opposed this, citing concerns that it would hinder innovation. Considering KAR’s history of filing lawsuits against proptech companies and pressuring agents to prevent the use of proptech brokerage platforms, there are concerns that this could lead to regression in the brokerage market.
On the same day, Zigbang CEO Ahn Sang-woo expressed concerns about KAR becoming a statutory organization. He said, "(KAR) is already causing difficulties for partner agents working with Zigbang even though it is not a statutory organization," adding, "Partner agents are asking whether their qualifications as agents might be jeopardized if KAR becomes a statutory organization."
He also revealed past experiences where the ‘Mobil’ housing management platform project, which was promoted with Ulsan City but opposed by the Korea Association of Realtors, was canceled. He stated, "Even though it had nothing to do with brokerage, the brokerage industry’s opposition led to the contract being terminated by Ulsan City."
He continued, "Investors have experienced market changes through past regulations, so they see this as the beginning of a move backward and have many concerns," adding, "The economy is not good right now, and investments in startups have decreased; such issues will make it even harder to secure investment." CEO Ahn also serves as the chairman of the Korea Proptech Forum, which gathers domestic proptech companies.
Meanwhile, with Zigbang joining the ‘Half-Price Brokerage Fee’ trend, competition in the brokerage fee market is expected to intensify. Darwin Brokerage offers a business model where buyers’ brokerage fees are discounted by 50%, and sellers are not charged any fees. Additionally, various proptech companies such as Jiptos and Estate Cloud (Udaebbang) provide affordable brokerage fee services.
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