The Constitutional Court ruled that brokers must not handle real estate transactions in an auction format where the seller does not present the desired "asking price" and instead sets only a minimum price, with multiple buyers submitting the highest price they can pay.
According to legal sources on the 31st, the Constitutional Court on the 27th unanimously dismissed a constitutional complaint filed by a lawyer surnamed Lee, who argued that the Ministry of Land, Infrastructure and Transport's notice, "Detailed standards for indicating and advertising particulars of brokerage properties," was unconstitutional.
Lee applied in Nov. 2021 for a patent on a real estate internet auction business method in which, once a real estate seller sets a "minimum sale negotiation price," a licensed broker lists the property on an internet auction site and then proceeds with brokerage steps starting with the prospective buyer who offers the highest price offline.
Lee then prepared to commercialize the idea and inquired via the e-People portal whether this business method violated relevant laws and regulations. The Ministry of Land, Infrastructure and Transport replied that, under the notice, the price of the brokerage property must indicate the expected transaction amount as a single price to provide accurate information to consumers. Lee then filed a constitutional complaint in Dec. 2022, arguing that the notice infringes equal protection and the freedom to conduct business.
Lee argued, "Even though the competitive bidding method maximizes consumer welfare, banning it violates the Constitution's market economy principles, causes consumer harm, and disrupts order in real estate transactions."
By contrast, the Constitutional Court found that allowing licensed brokers to indicate a "minimum sale negotiation price" could lead to "bait listings," in which "unclear prices including low figures are touted to lure consumers, only for higher prices to be presented during actual consultations," disrupting transaction order.
It added, "Every real estate listing differs widely in characteristics, situations, and conditions, while prospective buyers generally do not know most of the details," and said, "Presenting a single price provides accurate information to consumers and enhances transparency in the real estate market."
The Constitutional Court also said, "Even if the expected transaction amount is indicated as a single price, it merely serves as the seller's hoped-for price and a kind of reference price for buyers," adding, "If there are many prospective buyers, the seller can quote above the negotiation price, and under the law of supply and demand the price of the brokerage property is determined naturally."