Is This a Turf War? 100,000-Member Realtors Association Pressures Local Governments to Shut Down Direct Transaction Boards [Real Estate AtoZ]

Using Private Sector Guidelines to Pressure Local Governments
Jeju, Gwangyang, and Others See 'Domino Effect' of Direct Transaction Closures
Criticism Mounts Over "Infringement on Consumer Choice"
Number of Licensed Agencies Drops Below 110

The Korea Association of Realtors, which has about 100,000 members, has begun pressuring local governments to shut down real estate direct transaction services operated by public institutions. The association claims that its intention is to prevent potential fraud that may arise during direct transactions. However, there are criticisms that it is unreasonable for the association to cite government guidelines, which were created for private platform companies, as grounds for pressuring local governments. Some also argue that the real estate brokerage industry, facing an unprecedented downturn, is infringing on consumer choice in order to protect its own interests.

Applying Private Sector Standards to Public Services... Controversy Over 'Administrative Interference'

The building of the Korea Association of Realtors in Bongcheon-dong, Gwanak-gu, Seoul. Korea Association of Realtors.

According to the real estate industry on January 21, three local governments-Jeju Special Self-Governing Province, Gwangyang City, and Hwasun County in South Jeolla Province-recently suspended their real estate direct transaction bulletin boards on their official websites. The Korea Association of Realtors cited the risks of unlicensed brokerage and rental fraud as reasons for the closures, and the local governments accepted these arguments. Jeju Province stated, "We determined that operating a direct transaction bulletin board could actually pose safety risks to residents," while Gwangyang and Hwasun provided similar explanations for their decisions.

The association used the "Guidelines for Operating Real Estate Direct Transaction Platforms," which the Ministry of Land, Infrastructure and Transport announced in February last year, as leverage to pressure local governments. These guidelines recommend real-name verification and property listing authentication to prevent fraudulent listings and scams on private platforms such as Danggeun Market. A ministry official explained, "The guidelines were designed to encourage voluntary compliance by private companies and are not related to local governments." In effect, the association applied standards intended for the private sector to public-interest bulletin boards operated by local governments, raising concerns about overreach.

Industry analysts suggest that local governments accepted the association's demands due in part to concerns over administrative liability. A real estate industry insider said, "Although the bulletin boards clearly state that individuals are responsible for any incidents, local governments likely feared that they would be blamed if something went wrong. In addition, one cannot ignore the influence of the association, which has strong local organizations in each city, county, and district."

Closures Outpace Openings... The Brokerage Industry's 'Fight for Survival' on the Brink

The underlying reason for the association's scrutiny and push to close even little-known local government bulletin boards is the ongoing economic downturn. According to data from the Korea Association of Realtors, there were 9,982 real estate brokerage closures nationwide from January to November last year. During the same period, only 8,211 new brokerages opened. When including 1,152 temporary business suspensions, more than 1,000 offices are shutting down each month. With real estate transactions plummeting, small brokerages are struggling to pay rent, and direct transactions have become a significant obstacle to their livelihoods.

The pressure to close local government direct transaction sites has also drawn attention because it coincides with the association's push to become a statutory organization, a bill that is about to be voted on in the National Assembly. The revised bill no longer includes so-called "poison pill" provisions, such as the right to supervise and enforce regulations. However, the proptech (property + technology) industry predicts that, if the bill passes, the association will seek to regain these powers.

A proptech industry insider commented, "Many innovative startups have already been forced out of the market due to pressure from the established brokerage industry. If the association becomes a statutory organization and launches a full-scale offensive, consumer choice in services will be even further restricted."