(Yonhap feature) “Proptech” reshapes the real estate market with a digital platform and reduced fees

SEOUL, Sep 17 (Yonhap) – Hwang Jae-min checks his smartphone apps several times a day to research new homes for sale so that he can move to another home.

When the 41-year-old man bought a three-room apartment in Yongin, a satellite city south of Seoul, six years ago, he called several realtors and made house calls with them on weekends. .

This time, he downloaded several mobile apps offering information on apartments for sale, their transaction history, floor plans, as well as transportation and schools.

“I try to gather as much information as possible on my own to make a shortlist before actually visiting the properties,” Hwang told Yonhap News. “I don’t have enough time to visit several houses and in fact I don’t think it’s a good idea because of the coronavirus.”

While buying and selling homes involves a complicated decision-making process that often requires professional help, a wide range of startups are expanding their presence in the real estate market with simpler and more convenient platforms made possible by digital technology. .

The real estate industry has long resisted change, but is now disrupted by tech-driven startups focused on saving time and money, collectively referred to as ‘proptech (real estate technology)’.

Among them, Zigbang is one of the leading home-matchmaking platforms, which joined the country’s “unicorn” club after being valued at over 1,000 billion won ($ 855 million) in July.

After a decade in the industry, Zigbang now wants to become a major player in proptech with differentiated services based on big data, artificial intelligence and other technological upgrades.

Zigbang said he would scan the homes for 3D virtual tours, which would give real-time daylighting information and views to potential buyers.

It also plans to partner with licensed agents to launch the digital, contactless home transaction service and partner with home concierge companies to provide services such as cleaning, refurbishment and lending. extermination of parasites.

“The home-related service is expected to evolve from the current platform to the next generation,” Zigbang founder and CEO Ahn Sung-woo said in a meeting with reporters.

Taking advantage of the less time and money it takes to organize home visits and manage real estate offices, some platforms entice clients by connecting them with brokers at lower commission fees.

Dawinproperty, a real estate listing platform, has flexed its muscles in the Seoul metropolitan area since launching in 2019 by charging lower fees to buyers and exempting commissions from sellers.

In South Korea, both buyers and sellers pay brokerage fees ranging from 0.4 to 0.9% of the total transaction amount, and the lease rate ranges from 0.3 to 0.8% .

Dawinproperty said it now has over 100,000 users and 1,000 registered agents as more people want to swap homes at lower costs amid rising house prices, which has inflated proportionately brokerage fees.

“Switching from offline real estate transactions to online transactions can reduce office expenses, which can lower brokerage fees,” said Kim Seok-hwan, CEO of Dawinproperty.

As more people collect data online and easily compare prices from the comfort of their own homes, they are now reflecting on the role of traditional real estate agents and whether brokerage compensation is worth their service.

“I arranged my loan, consulted an accountant for tax matters and signed a contract with an interior company to renovate the new apartment,” Kim Su-jin, who recently bought an apartment in south Seoul. “I have the impression that real estate agents are making more money without improving their services, just because the houses have become more expensive.”

In response to growing complaints, the Ministry of Land, Infrastructure and Transport revised real estate commission rates, which are expected to go into effect next month.

While a 0.9% rate cap is currently enacted for properties priced above 900 million won, the new system will break down the ranges to charge 0.5-0.7% of the total transaction amount.

As a result, the maximum brokerage fee on the sale of a 900 million won home will be reduced by nearly half, from 8.1 million won to 4.5 million won, the ministry said.

The highest price range is even lower than the average apartment selling price in Seoul, which reached an all-time high of 1.2 billion won in July, according to real estate data from KB Kookmin Bank .

The commission rate cap on properties valued at over 600 million won has been reduced by 0.1 percentage point to 0.4%, while those priced below the line would maintain their current cap.

Brokers have strongly opposed the new brokerage fee cap, criticizing the government for passing the buck to them in an attempt to allay public mistrust of its real estate policies.

The Korea Association of Realtors argued that the country’s commission rate is very low compared to other countries and realtors are already struggling with a drop in transactions in a saturated market with around 110,000 agents. recorded.

Mainstream real estate agents have threatened to take collective action against the government’s “one-sided” decision to cut brokerage rates, filing several lawsuits against startups and even pressuring a comedian to drop an ad for Dawinproperty .

Despite the protests, the government has said it will stick to its policy and stricter regulations on the proptech industry to improve the transparency and convenience of real estate transactions.

Market watchers say changes are inevitable in the real estate industry, which has been relatively slow to embrace new technologies, due to the growing demand for contactless transactions amid the pandemic and the new services made possible by recent ones. technologies.

“The role of proptech is becoming increasingly important as technology can help alleviate information asymmetry, the biggest problem in the real estate market,” said Lee Kyung-ja, analyst at Samsung Securities. “Proptech is expected to move from a real estate listing platform to a one-stop real estate service to cover all interested parties, including buyers, sellers, agents and financial institutions. “

About Robert Valdivia

Robert Valdivia

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