Low PropTech Fees
AZIT is a blockchain-based, point integration platform for real estate and residential services. AZIT provides a service that allows users to conveniently use points as they see fit for residential services related to real estate or community facilities by integrating points that can be used anywhere.
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Today, we will take a look at the details of PropTech’s commission fees when trading. With these, not only buyers but also sellers can save money when buying and selling real estate. This is PropTech’s strength in the real estate market, and based on these strengths, PropTech will grow rapidly.
Low PropTech Fees
The Ministry of Land, Infrastructure and Transport announced an amendment to the Accredited Real Estate Brokers Act. The main goal of this amendment is to reduce real estate brokerage fees and improve brokerage services. It will be implemented after review by the Ministry of Government Legislators within a month. The key to the reform plan is to lower the rate of transactions worth more than KRW 600 million. In particular, they hope to lower the upper limit rate of commission fees for apartments worth more than 900 million won, which is currently 0.9%.
In the case of future sales contracts, commission fees on transactions worth KRW 600–900 million will be lowered to 0.4%, for KRW 900 million — KRW 1.2 billion 0.5%, for KRW 1.2 billion — 1.5 billion 0.6% , and for more than KRW 1.5 billion 0.7%. The upper limit rate for each transaction amount is set by the Enforcement Regulations and are within the scope of the ordinance. However, taking into consideration regional characteristics, the upper limit rate for each transaction amount can be set within a range of 1/1000th of the transaction amount added or subtracted.
The PropTech industry generally agrees with the policy direction of the Ministry of Land, Infrastructure and Transport. However, there is a continuing argument that the fee should be lowered even further, especially in the metropolitan area. When a one-billion-won house is traded, the upper limit of the commission falls from the current KRW 9 million to KRW 5 million won, but there is a point that it still falls short of the citizens’ expectations.
Therefore, the PropTech industry is planning to provide more diverse services at even lower fees than the government’s proposal in consideration of the citizens’ expectations. PropTech company Ziptoss plans to provide real estate brokerage services at a 70–80% lower rate than the government’s revised real estate brokerage fee. In addition, it plans to strengthen its own real estate brokerage education program, Ziptoss Academy Curriculum. Ziptoss will also introduce an examination system to raise the qualification standards for certified real estate agents.
Darwin Brokerage has confirmed its own brokerage fee rate as well, which is up to two times cheaper than the revised bill of the Ministry of Land, Infrastructure and Transport, and will go into effect from the 1st of next month. Darwin Brokerage has already provided a brokerage commission of 0 KRW when selling a house and half price on brokerage commissions when buying a house. When there is no burden of commission fees for purchase, a buyer can also purchase the property at half the commission rate of the government proposal.
Dabang, which signed an agreement with AZIT, is investing heavily in improving the quality of real estate services by launching its own electronic contract service “Dabang Sign.” It has also introduced blockchain technology that enhances the security of electronic contracts, 3D, virtual reality (VR), and video content for verification of objects. It is also working with the financial sector to transfer and pay down payments, deposits, and brokerage fees exchanged during the electronic contract process. It will also provide services such as one-stop lease loans when signing a lease.