The basic commission for appraisal, which assesses the value of real estate and land, will be increased for the first time in 11 years. The previously fixed basic commission of 200,000 won will rise to 250,000 won, a 25% increase. The appraisal industry sees this adjustment of a long-fixed basic commission as a realization of current market conditions.
According to the Ministry of Land, Infrastructure and Transport on the 20th, the 'criteria for the remuneration of appraisers' will be partially revised. The ministry has announced an administrative notice regarding the partial amendment to the criteria, which includes increasing the basic commission for appraisal from the current 200,000 won to 250,000 won. The ministry plans to gather opinions on the amendment until the 10th of next month.
The Ministry of Land, Infrastructure and Transport is implementing separate remuneration standards to prevent appraisal firms from inflating appraisal values based on the interests of clients to generate revenue. It stipulates that the basic commission applies to appraisal values below 50 million won. Currently, the basic commission for appraisal values below 50 million won is set at 200,000 won.
Considerations of rising prices have led the ministry to increase the basic commission for appraisal to 250,000 won, a 25% rise. The revised basic commission will apply not only to the segment of appraisal values below 50 million won but also to those exceeding 50 million won, thereby restructuring the commission system. The minimum commission for appraisal fees for properties subject to surcharge will be set at 375,000 won.
A ministry official noted, 'By modernizing the basic commission for appraisal, which has not been revised since 2014, consideration has been given to past inflation rates to ensure the quality of appraisals can be maintained.' He explained that the basic commission is typically adjusted every ten years.
In the appraisal industry, reactions to the government's push to raise the basic commission include the view that 'the long-stagnant basic commission has been realized.' An appraiser remarked, 'Regardless of how much of an increase it is, the fact that a long-fixed basic commission is being raised is welcome news.'
Even with the increase in the basic commission, the impact on clients requesting appraisals is not expected to be significant. Appraisals are utilized for dwellings as collateral for loans, meaning that higher commissions could increase the burden on clients. However, the current amendment to appraisal fees only raises the basic commission, and the system for surcharges linked to the appraisal value and the surcharge rates will remain unchanged. The structure for determining appraisal values adds a minimum commission of 0.8 times the basic commission or a maximum of 1.2 times, depending on the appraisal value.
A ministry official explained, 'Only the basic commission will change, and the system in which the commission rate is added based on the appraisal value will remain unchanged, so the impact on the market is expected to be minimal.'