[Real Estate A to Z] What’s the Difference Between ‘First-Come, First-Served’ and ‘No Priority’ in Case of Uncontracted Deals?

‘Sangdo Prugio Clavenue’ in Dongjak-gu, Seoul, is drawing attention as it begins first-come, first-served sales of uncontracted units starting from the 15th. This was a site where 7,828 people applied for 771 units in early last month’s subscription. However, upon closer inspection, not only the subscription winners but also most of the 3,855 preliminary winners, which is five times the supply, ended up giving up on purchasing.

Perspective view of 'Sangdo Prugio Clavenue' in Dongjak-gu, Seoul. [Image provided by Daewoo E&C]

Sangdo Prugio Clavenue faced controversy over its high sale prices from the early stages of its offering. The market reacted that the sale price of the 59㎡ exclusive area was in the low 1 billion KRW range, and the 84㎡ exclusive area was in the mid-to-high 1.3 billion KRW range, which was considered expensive given the location and surrounding market prices. Moreover, since it is a post-sale complex, buyers must pay the full balance by the move-in date in March next year, which adds significant financial burden and is cited as a reason for the uncontracted units.

Typically, apartment sales proceed with a non-priority subscription on the Korea Real Estate Agency’s subscription website (Chungyak Home), followed by first-come, first-served sales for uncontracted units. However, this site skipped the non-priority subscription and went straight to first-come, first-served sales. What is the reason for this, and what is the difference between non-priority subscription and first-come, first-served sales?

'Non-priority Subscription' vs 'First-come, First-served Sales'

Generally, apartment sales methods are divided into three main types: general sales (special supply, first priority, second priority), non-priority subscription, and first-come, first-served sales. After contracts are completed for first and second priority subscription winners through general sales, if there are still uncontracted units remaining, what is called ‘jupjup’ (picking up again and again) begins to sell those units.

‘Jupjup’ includes non-priority subscription and first-come, first-served sales, and the difference between the two lies in the subscription competition rate. In regulated areas such as the three Gangnam districts and Yongsan-gu in Seoul, if the competition rate for first and second priority subscriptions exceeds 1:1, a non-priority subscription must be conducted on Chungyak Home. On the other hand, apartment complexes that record a competition rate below 1:1 in non-priority subscriptions can conduct first-come, first-served sales independently to clear remaining units. In non-regulated areas, using Chungyak Home is optional, and the project owner can issue a non-priority announcement and accept applications independently.

Unlike non-priority subscription, first-come, first-served sales have the advantage that buyers can directly select the building and unit number. Although it is common to conduct non-priority subscriptions on Chungyak Home when uncontracted units occur, some suppliers go straight to first-come, first-served contracts for this reason. Since buyers are expected to show greater interest in first-come, first-served contracts where they can choose their desired floor or unit, the intention is to use this method to exhaust unsold units.

"Can Avoid the Stigma of Unsold Units... 'First-come, First-served Sales' May Increase"

Moreover, although restrictions such as residency limits and the requirement that all household members be non-homeowners have been lifted for non-priority subscriptions, the uncontracted rate remains evident. The reason suppliers go straight to first-come, first-served sales is to avoid publicly disclosing uncontracted unit information through non-priority subscriptions, which could create an image of ‘unsellable apartments.’ It is known that Sangdo Prugio Clavenue in Dongjak-gu, a non-regulated area, also skipped non-priority subscriptions on Chungyak Home and went straight to first-come, first-served sales.

Experts predict that more complexes will skip non-priority subscriptions and proceed directly to first-come, first-served contracts after the first-come, first-served contracts at Sangdo Prugio Clavenue. Park Jimin, head of the Monthly Subscription Research Institute, said, “Outside the three Gangnam districts and Yongsan-gu, which are regulated areas in Seoul, there is no need to conduct non-priority subscriptions on Chungyak Home. In the future, when uncontracted units appear, cases of going straight to first-come, first-served sales, which can avoid the stigma of unsold complexes and allow buyers to select their building and unit, may increase.”