Common Mistakes When Buying Real Estate in South Korea

Published on January 15, 2026 and written by Cyril Jarnias

Buying real estate in South Korea is a dream for many expatriates, investors, and even locals becoming homeowners for the first time. But behind Seoul’s futuristic towers and listings with impeccable photos lies an extremely regulated, expensive, complex market riddled with pitfalls for the uninitiated. Recent studies on the Korean market show a rise in property disputes, an increase in fraud, and a staggering number of buyers who end up short on money or stuck in contracts they don’t fully understand.

The goal of this article is simple: to review, in a concrete and data-driven way, the most frequent mistakes when buying real estate in South Korea, and show how to avoid them, whether you are a local or foreign buyer.

Underestimating the Real Budget for a Property Purchase

The first, almost universal mistake is to believe the price listed in the ad corresponds to the project’s real cost. In South Korea, data shows that new buyers on average underestimate their total costs by 3.6% to 8.1% of the property’s value. For a 1 billion won apartment, this represents between 36 and 81 million won in unexpected expenses.

The main budget items overlooked are acquisition taxes, registration fees, the agent’s commission, legal fees, renovation, furnishing, and, in cases of major work, temporary relocation costs.

Expense Item	Indicative Range (in % or KRW)	Synthetic Comment
Acquisition Tax	1% – 3% (up to 12% for multi-property owners)	High variation depending on property type, location, profile
Registration Tax (apartment)	approx. 0.2% of price	Reduced rate for standard apartments
Agent Commission	0.2% – 0.9% (≈ 9 M KRW for 1 B KRW)	Capped and negotiable, but rarely discussed by buyers
Legal Fees	0.25% – 1%	Lawyer, translations, administrative procedures
Renovation Costs (84 m², standard)	15 – 25 M KRW	Without structural work or luxury materials
High-end / Structural Renovation	40 – 50+ M KRW	Potential extra 10–20 M KRW for plumbing/electricity
Complete Furnishing (mid-range)	8 – 25 M KRW	Over 50 M KRW for high-end
Temporary Housing During Work	2 – 8 M KRW (2 to 6 months)	Frequent if the apartment is old

Studies indicate that 70 to 80% of first-time buyers face a budget shortfall. Add to that another blind spot: 65 to 75% of new buyers do not properly budget for renovation and furnishing costs, even though they affect almost all older apartments, including in Seoul’s central districts.

In a market where a “standard” apartment in Seoul costs around 1.1 to 1.2 billion won, and where some prestige properties easily exceed 2 billion, this lack of anticipation quickly turns into a cash flow crisis.

Miscalculating the Need for Initial Cash: The Trap of Deposits and Jeonse

Even when buying and not renting, Korea’s culture of large deposits plays a role. A frequent confusion is mixing rental mechanisms (jeonse, wolse) and purchase, and underestimating the cash needed upfront.

For a standard purchase of 1 billion won, the following must be added to the nominal price:

– the acquisition tax (1 to 3%);

– the registration tax (0.2% for an apartment);

– the agent commission (0.2 to 0.9%);

– lawyer and translation fees;

– sometimes a “key money” or other fees related to prior rental if buying an occupied property or replacing an existing jeonse.

Data shows these additional costs can reach 50 to 90 million won for a 1 billion won property. Result: 60 to 70% of new buyers underestimate the necessary cash flow. Among foreigners, the error is often compounded by a poor understanding of credit limits (LTV, DTI) which mechanically restrict the borrowable amount.

Poorly Choosing Between Purchase, Jeonse, and Wolse

In South Korea, access to housing isn’t just about buying or renting. You must decide between three main formulas: straight purchase, jeonse (large deposit, no monthly rent), and wolse (more modest deposit, monthly rent). A common mistake is making this choice without a clear strategy, letting the agent or urgency guide you.

Wolse seems simpler, but many underestimate its lack of flexibility and the total cost over several years. Contracts are often non-negotiable, with deposits representing 10 to 30% of a typical jeonse, plus high monthly rents. In the long run, these rents can equal or exceed the cost of a loan, while creating no equity.

Studies estimate that a vague strategy between these options (changing plans mid-stream, early termination, penalties) can cost 5 to 15 million won in “switching” fees alone.

Neglecting Legal Due Diligence and Hidden Debts

Another massive fault: signing a preliminary or final contract without conducting a proper legal and financial investigation on the property. The numbers are telling: between 55 and 65% of new buyers do not perform a thorough check on debts attached to the property, unpaid fees, or ongoing legal proceedings.

In large apartment complexes, unpaid maintenance fees can reach 5 to 20 million won. Add to that water, gas, electricity bills, or special assessments (façade work, elevator renovation, structural work) sometimes representing an additional 2 to 10 million won. These amounts can transfer to the new owner if not settled before the title transfer.

Another source of error lies in the Korean system’s workings: ownership is only legally transferred at the time of registration in the land register, not at contract signing or payment. Yet, many buyers – especially foreigners – believe they become owners upon signing, and do not sufficiently monitor the registration phase.

Finally, many buyers settle for informal contract translations, improvised by the agent or a bilingual friend, instead of using a certified translator. In a country where property disputes are increasing, this is a considerable risk.

Placing Blind Trust in the Real Estate Agent

Brokerage is highly regulated in South Korea, with a legal commission schedule and specific obligations on agents. Yet, errors related to choosing – or not controlling – the agent remain extremely frequent.

Many buyers, locals and foreigners alike, don’t even verify that the agent is properly licensed via the Korean Association of Real Estate Brokers database. They accept the announced commission rate without knowing it is capped by law and often negotiable.

In Seoul, the schedule for home sales looks like this:

Price Range (house/apartment sale)	Maximum Theoretical Rate	Cap or Remark
< 50 M KRW	0.6%	Cap 250,000 KRW
50 – 200 M KRW	0.5%	Cap 800,000 KRW
200 – 600 M KRW	0.4%	No cap mentioned
≥ 900 M KRW	0.9%	No cap, to be negotiated

For rentals, the system is similar, with a “transaction amount” calculated from the deposit and rent (e.g., deposit + rent × 100). Yet, concrete cases show massive overcharging, especially towards foreigners paying in cash without demanding a receipt, tax invoice, or clear copy of the calculation.

Misunderstanding Mortgage Loans and Financing Rules

The Korean mortgage loan system relies on strict safeguards: loan-to-value ratios (LTV) generally limit borrowing to 60–70% of the property’s value, and debt-to-income ratios (DTI) restrict total repayments to 40–60% of monthly income. In certain highly regulated areas, especially for properties exceeding 1.5 billion won, constraints are even stricter.

In Seoul and its surroundings, a cap of around 600 million won on loans for foreigners is common, regardless of the property’s price. In other words, for a 1.2 billion won apartment, one often needs to be able to raise over 600 million won in equity or via foreign financing, which is not always understood at the time of signing the preliminary contract.

Among Korean buyers who already own a property, another typical mistake is: neglecting the impact on their right to new loans. Being a multi-property owner can block access to preferential loans and trigger exorbitant acquisition tax rates (up to 12% of the value). Poor anticipation of this regulation can turn a “profitable” deal on paper into a financial sinkhole.

Underestimating Taxes and Recurring Costs

Even once the property is paid for and the keys are in hand, the expenses have just begun. A major source of error is underestimating the cumulative weight of property taxation and operating costs over several years.

The main items to anticipate are as follows.

Type of tax / charge	Order of Magnitude	Main Remarks
Acquisition Tax	1–3% (up to 12% for certain multi-owners)	One-time tax at purchase
Registration Tax	approx. 0.2% for an apartment	Can be higher for other property types
Annual Property Tax	0.2–0.5% of official value	Plus a local education surtax (20%)
Annual Holding Tax (CRET)	0.5–5% above certain thresholds (e.g., 900 M KRW)	Aims at high real estate assets
VAT on some new / commercial properties	10%	Does not apply to land
Building Management Fees (gwanlibi)	200,000 – 800,000 KRW / month, >1 M for luxury	May include heating, security, maintenance, etc.
Special Assessments for Major Works	10 – 50 M KRW	Elevators, facades, structural upgrades to code

Overall, studies show buyers commonly underestimate the cumulative cost of taxes and fees by 3 to 15 million won per year. High-end complexes may require over 1 million won per month in gwanlibi, which weighs heavily on a monthly budget, especially when added to a mortgage payment.

Poorly Assessing the Location and True Value of the Property

As everywhere, location is key, but in South Korea, the valuation gap due to location can range from 10 to 30%. And buyers often make risky bets on new developments in the periphery, convinced they are buying “the future,” while data shows that older, ideally located apartments in central Seoul often have better long-term performance.

Many foreign buyers focus on popular districts – Gangnam, Itaewon, Yongsan – without analyzing local demographic trends, air quality, infrastructure plans, or oversupply risks. However, the country is heading towards a marked demographic decline, with record-low fertility and entire regions depopulating, where properties are hard to resell and appreciate little.

Ignoring Certificates, Inspections, and Reconstruction Constraints

In a country exposed to earthquakes and where construction defect scandals are not uncommon, buying without examining compliance certificates and safety diagnostics is a dangerous gamble. A key document is the certificate of completion (final construction inspection), which certifies the building meets the standards in force at the time of delivery.

In South Korea, the issue of reconstructing apartment complexes is also central. Many owners bank on the prospect of demolition-reconstruction to benefit from a more modern building and capital gains. But regulation limits these operations: minimum building age (often around 30 years, with debates to raise it to 40), mandatory safety diagnostics, technical scores weighted between structural safety, residential environment, finishing condition, and cost analysis.

Neglecting Cultural and Linguistic Specifics of Negotiations

Beyond legal and financial aspects, many mistakes stem from a lack of knowledge of the Korean cultural context, even more pronounced among foreigners. Property negotiation often happens in groups, with an indirect communication style and a strong emphasis on relationship. A “we’ll think about it” can mean a refusal, silence can be a sign of discomfort, and concessions requested after contract signing are common, as the signature is often perceived as the beginning of the relationship rather than the end of the negotiation.

Sellers or intermediaries may play on the foreign buyer’s impatience, delaying certain responses until the day before their planned departure, to obtain last-minute concessions. Relying solely on the Korean-side interpreter, without an independent translator, puts the buyer in a weak position. The party that controls the language and the schedule often controls the deal’s outcome.

Local Law Firm

Misunderstandings about politeness codes can also lead a foreigner to give in too quickly, or conversely, to antagonize their interlocutor. In a market where demand is strong in certain segments, losing face is sometimes considered worse than losing a buyer: better to abandon a sale than accept conditions deemed offensive.

Running Afoul of Rules Specific to Foreigners (Permits, Occupancy, Financing)

Since 2025, a major change affects foreign buyers in the Seoul metropolitan area. A prior permit system, currently limited to one year renewable, requires non-nationals to obtain authorization before acquiring a home in all of Seoul, a large part of Gyeonggi province, and several districts of Incheon.

This new regulation aims to curb foreign speculation and align, at least partially, the constraints with those applying to Korean citizens. Mistakes made by foreigners have multiplied since its implementation:

These rules add to other classic restrictions: the need to obtain special permission to buy in military zones, near protected cultural heritage, or in ecological conservation areas; obligation to report the acquisition to the city hall or competent office within 60 days; and, for investments via a company, formalities under the Foreign Investment Promotion Act.

Forgetting the Macroeconomic Context, Demographics, and Systemic Risks

Final aspect, rarely integrated by individuals: the unstable macroeconomic environment of the Korean real estate market. The country experienced a price surge in the 2020s, followed by a sharp drop in 2022–2023, with a real price decline of about 10%. Seoul is holding up better than the rest of the country, but the gap is widening between the capital and regions, the latter having been in decline for several years.

Demographically, South Korea has one of the world’s lowest fertility rates and is heading towards a marked population contraction by 2070. Areas in demographic decline already see their markets stalling: properties hard to rent, long sales times, low capital gains. Investors who don’t analyze these trends sometimes buy in already structurally oversupplied cities, lured by lower prices than Seoul, but with little real resale potential.

How to Turn These Pitfalls into Advantages

The picture may seem bleak, but all these mistakes have one thing in common: they are avoidable. Data shows that those who enlist a specialized lawyer, systematically check the land register, verify debt history, understand legal commission schedules, and accurately model their cash flows over several years dramatically reduce their risk of bad surprises.

South Korea offers a relatively transparent legal framework, a robust land register, codified taxation, and a stable political environment. It’s not an impossible market: it’s a market that harshly penalizes improvisation, naive trust, and the copy-pasting of habits acquired in other countries.

Investment Context in South Korea

For a buyer, local or foreign, understanding the most frequent mistakes – from miscalibrated budgets to ignoring new permit rules for foreigners, and underestimating renovation and maintenance fees – is the best way to turn a regulatory maze into a controlled opportunity. In South Korea more than elsewhere, a successful purchase isn’t just about address or square footage: it’s first and foremost a matter of preparation.