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An Empirical Analysis on the Establishment of Real Estate Trade Closing Services and Alternative Brokerage Firm Systems

  • Korea Real Estate Review
  • 2013, 23(1), pp.67-96
  • Publisher : korea real estate research institute
  • Research Area : Social Science > Law > Law of Special Parts > Law of Real Estate

유은길 1

1한성대학교

Accredited

ABSTRACT

The main subjects of this study, which is based on positive institutionalism approach, are brokerage firm systems (independent contractor, franchise) and trade closing services (inspection, title insurance, escrow). This study analyzed the necessity of establishing theses systems and the priority of system establishment. This study is based on methods of survey targeting domestic brokers, customers and real estate experts, AHP(analytic hierachy process) interviews with domestic experts. This study tried to find a way to improve Korean brokerage market and system through these research methods. Survey results indicate that all of brokers’, customers’ and experts’ group agree that it is necessary to improve institutions because brokerage market has many problems and it is possible to improve it through institutional reform. And they supported the introduction necessity of closing service including inspection, title insurance and escrow. More than 70% of brokers and experts, and up to 60% of customers agreed to the rise of service fee which resulted from the introduction of closing service. Therefore, this survey shows that additional cost caused by the establishment of closing service can be accepted in Korean brokerage market. In connection with brokerage firm system, customers and experts appeared the positive cognition of comparatively high level about independent contractor and franchise, whereas brokers appeared the relatively negative cognition about those. The results of AHP interview method for the priority analysis of institution introduction indicated that the establishment of trade closing service ranked No. 1, followed by the building of brokerage firm system and the improvement of brokers’ professionalism. In relative importance analysis among 8 detailed brokerage institutions, escrow ranked first, followed by franchise, inspection, title insurance, independent contractor, broker education, broker qualification and broker’s license test. In conclusion, It is necessary to make a law related to the institution of trade closing service including inspection, title insurance and escrow. The construction of brokerage firm which operation system such as franchise with function for this very purpose and independent contractor works properly is also required. But, brokers’ relatively negative cognition about franchise and independent contractor is a problem which should be solved.

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