Korean Realtor Fee
Overview
Brokerage commission in Korea is capped by ordinance rather than negotiated freely, and the applicable rate depends on both transaction type and price band. Sales are charged 0.6 percent below 50 million won with a 250,000 won ceiling, 0.5 percent to 200 million, 0.4 percent to 900 million, 0.5 percent to 1.2 billion, 0.6 percent to 1.5 billion and 0.7 percent above. Rentals follow a parallel but lower schedule beginning at 0.5 percent. Value-added tax of ten percent is added to the commission, and each side of the transaction pays its own agent separately. A 700 million won apartment sale falls in the 0.4 percent band, producing 2.8 million won of commission and 280,000 won of VAT for each party. The published figures are maxima, so a lower rate can be agreed in writing before the contract is signed.
Variables
| Symbol | Name | Unit | Description |
|---|---|---|---|
| $Price$ | Transaction value | KRW | Sale price, or the deposit-equivalent value for a lease. |
| $Rate$ | Commission rate | % | The statutory ceiling for the price band, from 0.6% to 0.7% on sales. |
| $VAT$ | Value added tax | % | 10% added to the commission where the agency is VAT-registered. |
A Capped Rate, Not a Negotiated One
Korean brokerage commission (중개보수) is bounded by a statutory schedule rather than set by the agency. The quoted figure is a ceiling, and value added tax sits on top of it:
$$Fee = Price \times Rate + VAT(10\%)$$
Sale Schedule
| Transaction value | Rate | Cap |
|---|---|---|
| Up to 50,000,000 KRW | 0.6% | 250,000 KRW |
| 50,000,001 – 200,000,000 KRW | 0.5% | — |
| 200,000,001 – 900,000,000 KRW | 0.4% | — |
| 900,000,001 – 1,200,000,000 KRW | 0.5% | — |
| 1,200,000,001 – 1,500,000,000 KRW | 0.6% | — |
| Above 1,500,000,000 KRW | 0.7% | — |
Lease Schedule
Leases run on a separate, lower table: 0.5% up to 50,000,000 KRW with a 200,000 KRW cap, then 0.4%, 0.3%, 0.4%, 0.5% and 0.6% across the same ascending bands.
The Non-Monotonic Middle
The sale rate falls from 0.6% to 0.4% and then rises again above 900,000,000 KRW. The dip reflects a policy decision that mid-priced transactions should not carry a proportionally larger commission than small ones, while the upper bands restore a rate that tracks the work involved in high-value transfers.
Derivation & History
The schedule replaced a uniform percentage after complaints that commissions on high-value Seoul apartments had risen far faster than the service rendered. The 2021 revision cut the top bands and introduced the current shape, in which the lowest effective rate falls in the 200,000,000 to 900,000,000 KRW range that covers most standard apartment transactions. The two absolute caps at the bottom of each table exist so that very small leases and sales do not attract a fee that is negligible in absolute terms yet disproportionate to the agent's fixed costs.
Worked Examples
Apartment sale at 700,000,000 KRW
- The price falls in the 200,000,001–900,000,000 KRW band: Rate = 0.4%
- Commission ceiling: 700,000,000 × 0.004 = 2,800,000 KRW
- Value added tax: 2,800,000 × 0.10 = 280,000 KRW
- Each side pays its own agent, so the buyer and the seller are billed separately
Result: 3,080,000 KRW per party including VAT
Edge Cases & Limitations
Band boundaries move the rate, not a slice: at 900,000,001 KRW the whole transaction is charged at 0.5% rather than 0.4%, so the fee jumps by roughly nine hundred thousand won across one won of price.
Caps bind only at the bottom band: the 250,000 KRW sale cap and 200,000 KRW lease cap apply below 50,000,000 KRW, where the percentage alone would produce a trivial fee.
Leases are converted before the table is read: a monthly-rent contract is restated as a deposit-equivalent value, so the band depends on that conversion rather than on the headline deposit.
VAT is conditional: a simplified-taxpayer agency charges a lower rate or none, so the 10% add-on should be confirmed against the agency's registration status.
Real-World Applications
The schedule is quoted in every Korean brokerage contract and forms part of the closing-cost estimate alongside acquisition tax and registration fees. Because the statutory figure is a ceiling, it also sets the reference point for negotiation: discounts are expressed as a fraction of the capped rate. Property portals publish the same table so that buyers can verify an invoice before settlement.