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“I bought an apartment of 910 million won, but the brokerage agency asks me to pay 8 million won as a commission. It’s all that I showed you the apartment once, and it’s amazing.”
As apartment prices soar, there is a frequent flurry between buyers and brokerages due to brokerage fees (brokerage fees). This is because the brokerage agency does not make much effort and demands a commission rate of 0.9%, which is the legal upper limit. The government plans to complete the reorganization of the brokerage commission rate by June, reflecting public opinion that the burden on real estate brokerage commissions has increased. However, before that, it is necessary to learn the know-how to reduce brokerage fees, such as negotiating the fee rate before contracting and receiving year-end settlement.
“Reduce excessive brokerage fees”
The government plans to come up with a plan for improving housing brokerage repair and brokerage services to reduce fees to 5.5 million won when trading a 1 billion won apartment by June. The Ministry of Land, Infrastructure and Transport plans to finalize a plan to improve the brokerage service by reviewing the public opinion that “the real estate brokerage fee burden is high” and the recommendations for improvement from the National Rights Commission.
It is pointed out that the rise in brokerage fees is a major cause of the government’s failure in real estate policy. According to the Korea Real Estate Agency on the 7th, the average sale price of apartments in Seoul last month was 93.8 million won. Immediately after it exceeded 800 million won in January 2019, it went through a temporary adjustment period. Since then, it has risen steadily and has risen to 900 million won in two years and one month.
According to the current real estate brokerage commission rate, a maximum rate of 0.9% is applied when trading apartments exceeding 900 million won. Assuming that you are trading an apartment of 1 billion won, you have to pay up to 9 million won. As apartment prices rose, brokerage fees also surged. If the current apartment transaction amount is less than 50 million to 200 million won, the upper limit rate is applied at 0.5%. Subsequently, when transactions are made for less than 200 million to 600 million won, it is calculated according to the upper limit rate of 0.4%. If it is more than 600 million won and less than 900 million won, 0.5% is applied.
The Kwon Ik Committee proposed several proposals regarding the improvement of the brokerage fee rate system. The first and most promising proposal is the method of subdividing the current 5-stage standard of transaction amount into 7 levels and applying a progressive rate fixed rate for each section. It is a plan to increase the brokerage commission rate for apartment sales of less than 600 million won to 0.5%, and 0.6% to less than 600 million to 900 million won by 0.1 percentage point. 0.7% is applied for more than 900 million to 1.2 billion won and △0.4% over 1.2 billion to 1.8 billion won △0.3% over 1.8 billion to 2.4 billion won △0.2% over 2.4 billion to 3 billion won △0.1% for more than 3 billion won As the amount increases, the rate decreases. If this is applied, the brokerage fee of 9 million won, which is 9 million won when buying and selling a 1 billion won apartment, is reduced by 38.9% to 5.5 million won. If it is 2 billion won, it will be cut in half from the current maximum of 18 million won to 9.9 million won. However, the Korea Council of Consumer Organizations said, “The consumer burden will increase in the range of more than 200 million won to less than 900 million won in transaction amount.”
In the second plan, for purchases with a house price of less than 1.2 billion won, it is calculated as in the first plan, and in the section of the high-priced housing transaction exceeding 1.2 billion won, the brokerage fee is determined through consultation with an authorized broker. It is an evaluation that it reflects a lot of the opinions of public brokers.
To reduce real estate brokerage fees
In the real estate community, there are many questions about how to lower brokerage fees. This is because the brokerage fee is limited only by the maximum rate and the limit, so there is not a small difference depending on the calculation method. A, who bought an apartment for 1 billion won in Samsong District in Goyang, Gyeonggi-do in January, paid 0.9% of the amount as a commission. Mr. A said, “When I was buying an apartment for the first time, I knew that I had to pay the brokerage fee at the highest rate, so I paid it all.”
Experts advise that in order to reduce brokerage fees, it is necessary to first investigate the price of commissions in the brokerage establishments with transactions. The commission rate for apartments of 900 million won or more is set at a maximum of 0.9%, but there are brokerage agencies that download up to 0.2%. In Samsong District, most brokerage businesses apply 0.4% as a commission rate, so if you trade a 1 billion won apartment, you can save 5 million won in brokerage costs compared to 0.9% when you apply for an apartment. An official of a brokerage firm explained that “commissions are falling as competition between brokerage firms intensifies recently,” and said, “If you buy and sell an apartment of 900 million won, the brokerage commission market price is usually around 0.4%.”
It is better to negotiate brokerage fees before contracting. This is because the brokerage firm can insist on applying the highest rate after the sale contract is over. If you intend to receive 10% VAT on the brokerage fee, you must confirm that it is a general business operator. This is because simple taxpayers are exempted from sub-taxation.
Some brokerage firms will not issue cash receipts instead of lowering fees. However, to prevent tax evasion, the issuance of cash receipts is mandatory, and if not, it can be reported. In addition, the cash receipt must be cut off so that when the house is sold later, the fee is recognized as an expense and capital gains tax can be reduced. Income deduction is also possible for year-end settlement.
Reporter Bae Jeong-cheol [email protected]