Rising housing market polarizes realtors
“I remember getting more than 10 deals a month when the town was being redeveloped but the number of real estate agents has increased significantly in the region,” said Kim. “Starting about five years ago, I often had no deals at all during the whole month and I think about stopping this business multiple times every day.”
The situation is different in three major districts in southern Seoul ? Seocho, Gangnam and Songpa. A real estate agent near the Jangmi Apartment complex in Jamsil, southern Seoul, said he closed deals on two apartment units each worth about 100 million won ($89,126) this year and earned more than 30 million won as commission from the two deals. “It is becoming more competitive to get deals but I earn enough to feed myself if I manage to proceed with a deal at least once a month,” he said.
Realtors receive commissions after buyers and sellers sign deals. The commission rate is between 0.4 percent and 0.6 percent for a property worth less than 900 million won and it goes as high as 0.9 percent for that is priced over 900 million won. For monthly rent and jeonse, or long-term deposit, contracts, realtors receive between 0.15 percent and 0.8 percent as commission.
The price of apartment units in Seoul surpassed 600 million won on average. This means a realtor can receive up to 6 million won as commission for a single trade.
It appears that realtors are earning a lot. Many are planning a career in real estate in retirement. This is why some compare exams for real estate licenses to civil service exams for middle-aged people.
Since the new administration came into power this year, the housing market is starting to boom, especially in Seoul. But not all realtors in the country are happy.
Recently, the Korea Association of Realtors (KAR) surveyed its 15,000 members and data showed the hardships they are experiencing. Many are having a rough time but the polarization between those who are doing extremely well and those who are not is getting bigger.
According to the survey, 22 percent of respondents said their yearly revenue was between 12 million won and 24 million won. Those who said they earn less than 36 million won accounted for more than half of the total.
Even though their earnings remain low, the study found that many are spending a lot for fees, advertisement, labor costs and office rentals. Research showed that 35 percent of the survey respondents spend between 1 million won and 2 million won a month to run their businesses, and more than 70 percent are spending at least 1 million won.
“More than half of realtors earn less than 1 million won a month and about 80 percent earn less than 2 million won a month,” said Hwang Ki-hyeon, President of KAR.
Even though the economic conditions for realtors remain weak, the number of agents rose from 82,931 in 2012 to 99,799 as of May. The number of people applying for the real estate agent licenses rose 22 percent year-on-year from 157,144 in 2015 to 191,508 last year. Those who received licenses also rose from 9,846 in 2013 to 22,340 last year.
Housing transactions, on the other hand, fell from 1.08 million in 2006 to 800,000 in 2010. Transactions rebounded to 1.19 million in 2015 but it fell to 1.05 million last year. Statistics show that a realtor gets one contract a month, on average.
KAR says that the economic situation for realtors worsened after some of the regions in the country, including metropolitan Seoul, lowered real estate commission rates in 2015. Customers still believe the rates are high.
When clients buy or sell 1 billion won worth of property, they pay up to 9 million won in commission fees. Some other businesses are entering the real estate business as well for the same reason. There are mobile apps like Zigbang and Dabang that help buyers and sellers connect.
Some argue the fall of real estate agents is because of the lack of their professionalism. The argument is that what they are doing is finding buyers after sellers list properties on the market.
“Realtors need to offer other services like consulting, financing and accounting, instead of focusing on finding buyers,” said Kim Eun-jin, a researcher at Budongsan 114, a real estate information provider.
BY KIM KI-HWAN [firstname.lastname@example.org]
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