Real Estate Transactions Enter the Digital Era: Electronic Contracts Surpass 500,000, Double in One Year [Real Estate AtoZ]

Utilization Rate Surpasses 12%, Private Brokerage Sector Grows 4.5 Times
Effective in Preventing Lease Fraud and Lowering Loan Interest Rates

The use of "real estate electronic contracts," which allow people to buy and sell homes or sign lease agreements online without exchanging physical documents, is rapidly increasing.

The Ministry of Land, Infrastructure and Transport announced on January 22 that the number of real estate transactions completed through electronic contracts last year reached 507,431, more than double the previous year's 231,074 cases.

The share of electronic contracts in total real estate transactions also surpassed 10% for the first time, reaching 12.04%. Transactions through private intermediaries surged 4.5 times from 73,622 to 327,974 cases, indicating that electronic contracts, once centered on the public sector, are quickly spreading to the private market.

The Ministry has continuously improved the system's convenience to promote the use of electronic contracts. In the second half of last year, it added a feature to directly transmit contract information to the Korea Housing & Urban Guarantee Corporation (HUG) for lease guarantee reviews, and established a two-way contract modification link with the private brokerage platform "Hanbang." The servers were also replaced to accommodate the surge in users. Starting at the end of this month, the number of authentication methods will be expanded from the current three (mobile phone, i-PIN, and joint certificate) to 15, including simplified authentication options such as Naver, Kakao, and Toss.

With electronic contracts, a broker drafts the contract online, and the parties involved sign electronically. Upon completion, the real transaction report and official date assignment are processed automatically, and the contract is stored at the certified electronic document center for access at any time. After a pilot launch in Seocho District, Seoul in 2016, the system was expanded nationwide in 2017. It is currently operated by the Korea Real Estate Board under commission.

Electronic Contract System Usage Performance. Ministry of Land, Infrastructure and Transport

Using electronic contracts offers a range of benefits in terms of safety, convenience, and cost-effectiveness. First, thorough identity verification through certified authentication blocks unauthorized brokerage activities and contract forgery, making it effective in preventing lease fraud. Administratively, real transaction reporting and official date assignment are handled automatically without visiting government offices, and the obligation to store paper contracts is waived. Financially, users can receive preferential interest rates of 0.1 to 0.2 percentage points when obtaining loans, and can also save on registration agency and guarantee fees.

At the end of January, the Ministry and the Korea Real Estate Board plan to reward 15 outstanding licensed brokers who have contributed to the promotion of electronic contracts. The top awardee completed about 360 electronic contracts in a year, achieving three times the highest performance of the previous year.

Park Junhyung, Director of Land Policy at the Ministry, stated, "We will continue to improve the system and expand incentives to broaden the base of electronic contracts," adding, "We will do our utmost to create a digital environment where people can trade real estate more safely and conveniently."