Injoys
The key to minimizing losses when buying your first home is neither distrusting the real estate agent nor relying on them completely, but cross-checking important facts against official documents and on-site conditions. The information below is based on the home purchase process in South Korea, and legal judgments regarding individual contracts may vary depending on the facts.
Real Estate Transaction Misconceptions to Correct First
Is It Always Safer to Visit Multiple Real Estate Agencies?
Comparing market prices and explanations from two or more real estate agencies helps reduce information bias. However, there is no rule requiring you to visit at least three. The same property may be listed with multiple agencies, and even numerous visits will not make a transaction safe if you neglect to verify the rights and interests involved.
When evaluating a real estate agency, it is better to look for the following practices.
- Does the agency allow you to verify its registration certificate and the identity of the person in charge?
- Does the agent ask detailed questions about priorities such as your budget, loan, commute, and move-in date?
- Does the agent explain not only the property's advantages but also its rights and interests, areas requiring repairs, and transaction risks?
- Does the agent distinguish between actual transaction examples and current listings when presenting the basis for price assessments?
- Rather than pressuring you to sign a contract, does the agent explain which documents to check and the relevant schedule?
- Does the agent transparently explain the brokerage fee, whether co-brokerage is involved, and the relationships among the parties to the transaction?
The mere fact that an agent actively engages in co-brokerage does not necessarily mean the agent is on the buyer's side. In South Korea, brokerage fees charged to each client and settlement arrangements between co-brokers are separate, and the actual interests involved vary by transaction.
Is the Confirmation and Explanation Statement for the Property a Notarized Document?
No. The confirmation and explanation statement for the property is an important document that a licensed real estate agent must prepare by verifying and explaining matters in accordance with applicable laws and then provide to the parties to the transaction. However, it is neither a notarized document nor an inspection report guaranteeing the property's overall condition. Defects that are difficult to discover through an ordinary inspection, such as leaks hidden behind furniture or finishing materials, may not be recorded.
Does Unilaterally Withholding the Balance Protect the Buyer?
Even if a serious problem is discovered, if the buyer unilaterally refuses to pay the entire balance without checking the contract and legal grounds, the buyer may face an issue of breach of contract. The buyer should first secure evidence and, through the agent, reach a written agreement with the seller regarding repairs, withholding part of the payment, or changing the schedule. If no agreement is reached or the amount is substantial, it is safer to consult a lawyer or other legal professional before refusing payment.
Step 1: Set Your Budget and Purchase Criteria
If you calculate your budget based only on the purchase price, you may run short of funds when paying the balance. Estimate the following costs separately.
- Timing of the deposit, interim payment, balance, and use of your own funds
- Taxes such as acquisition tax
- Brokerage fee and whether value-added tax applies
- Costs related to title transfer registration and judicial scrivener fees
- Loan-related incidental costs
- Moving, repair, appliance, and furniture costs
- Apartment maintenance fees and various settlement payments
Before searching for properties, do not merely check the maximum loan amount available; also assess whether the loan can actually be disbursed. The outcome may vary depending on the type and price of the home, collateral value, income, existing debt, whether the property is in a regulated area, and the financial institution's review. A preliminary consultation or estimated limit does not constitute final approval.
Dividing your purchase criteria into “essential,” “preferred,” and “negotiable” will help you remain consistent during negotiations.
| Category | Examples |
|---|---|
| Essential | Maximum total budget, minimum number of rooms, available move-in date, maximum acceptable commute |
| Preferred | Distance from a subway or train station, orientation, floor, parking conditions, school district |
| Negotiable | Interior design, specific building, view, whether newly built |
Step 2: Verify the Real Estate Agency and the Person in Charge
Check the real estate agency registration certificate, displays related to licensed real estate agent qualifications, and brokerage fee rate table posted at the office. You may also ask whether the person who showed you the property is a brokerage assistant or an affiliated licensed real estate agent. A brokerage assistant must disclose that they are a brokerage assistant, and you should verify that the procedures for preparing and signing the contract and confirmation and explanation statement comply with applicable laws.
A good agent does not ask only about the buyer's maximum budget. The agent should be able to answer the following questions with supporting grounds.
- Why do recent actual transaction prices differ from current asking prices?
- What are the rights and interests involving the owner, mortgages, seizures, provisional seizures, jeonse rights, and other matters?
- Who currently occupies the property, and when can it be vacated?
- What are the history of leaks, condensation, and repairs, and which fixtures are included?
- How will it be verified that no additional rights are established between signing the contract and paying the balance?
You should disclose your budget and need for a loan to receive suitable recommendations, but you do not need to reveal your highest negotiable price from the outset. It is reasonable to distinguish between the financial conditions the agent needs to know and the negotiation limit to be presented to the seller.
Step 3: Cross-Check Market Prices and Public Records
Property advertisements and the agent's explanations are only the starting point for verification, not the final basis for a decision. At a minimum, compare the following materials.
| Source | What to Check | Limitations |
|---|---|---|
| Ministry of Land, Infrastructure and Transport's Actual Transaction Price Disclosure System | Actual reported purchase prices, transaction dates, floors | Updates may take time after reporting, and interior conditions cannot be determined |
| Certificate of Registered Matters | Owner, mortgages, seizures and provisional seizures, jeonse rights, etc. | Does not guarantee actual occupancy status or every relevant fact |
| Building Register | Use, area, structure, indication of unlawful construction, etc. | May differ from the property's actual construction status |
| Land Use Plan | Use zones and districts, and restrictions on activities | Does not guarantee whether future projects will be finalized |
| On-Site Inspection | Noise, natural light, odors, cracks, signs of leaks, parking | Conditions may appear different depending on the time of the visit and weather |
Checking the certificate of registered matters only once when first viewing the home is insufficient. Check the latest status again before signing the contract, when necessary before and after making an interim payment, and immediately before paying the balance. Compare the owner's name against their ID, and if an agent signs the contract on the owner's behalf, verify the authenticity and scope of evidence of authority, such as the power of attorney and seal certificate.
For a property with a trust registration, separately verify the registered trustee and the authority to dispose of the property under the trust register. Do not enter into a contract based solely on the explanations of the person named in the records or the occupant.
Step 4: Inspect the Home in Person at Different Times
If possible, visit under different conditions, such as during the day and evening or on weekdays and weekends. Immediately after rain is a good time to check for signs of leaks, but whether a leak exists cannot be conclusively determined from a single visit.
Interior Inspection Items
- Stains in ceiling and exterior-wall corners, lifting wallpaper, and moldy odors
- Signs of condensation around windows and the condition of silicone sealant
- Water pressure and drainage when multiple faucets are running simultaneously
- Leaks and corrosion beneath the kitchen sink and washbasins
- Boiler operation, heating manifold, and hot-water condition
- Cracks, tilting, and finish damage on walls and floors
- Fixtures included in the sale, such as built-in cabinets, air conditioners, and lighting
- Noise and odors from other floors, roads, railways, and commercial premises
Additional Items to Check for Multi-Unit Housing
- Number of available parking spaces and nighttime parking conditions
- Repair condition of common areas such as elevators, exterior walls, and rooftops
- Whether maintenance fees are overdue and how they will be settled on the balance payment date
- How settlement items such as long-term repair reserves will be handled
- The official stage of any reconstruction or remodeling initiative
Obtain the owner or occupant's consent before taking photos or videos, and record the date and location. If a professional inspection is necessary, you may also consider engaging a home inspection professional with the seller's consent before signing the contract.
Step 5: Finalize the Agreement Before Transferring a Preliminary Deposit
Calling a payment a “preliminary contract deposit” does not automatically weaken its legal effect. If money is transferred after an agreement has been reached on essential terms such as the property and purchase price, disputes may arise over whether the main contract was formed or whether the money can be refunded.
Before transferring money, confirm at least the following by text message or in a separate document.
- Exact identification of the property
- Purchase price and the nature of the money paid
- Date of the main contract and balance payment date
- Conditions under which the money may be refunded or forfeited
- How a loan denial will be handled
- Registered rights and occupancy status
- Whether the seller and buyer agree to the key special provisions
Do not transfer money solely because the agent says, “Send it first and we can hold the property.” You should also verify who the contracting party is and why the money is being sent to the agent's account.
