"This Isn't Online Shopping... How Can Backing Out of a Home Purchase Be Called a Simple Change of Heart?"

[The Financial News]#1. Seller A received a phone call from the district office. The buyer had applied for a land transaction permit but was now asking to withdraw the application. Although they had already reached a preliminary agreement, the buyer was trying to walk away from the purchase over what was essentially a simple change of heart.#2. Seller B was contacted by the buyer, who said asking prices in the area had fallen since they agreed on terms and demanded an additional discount in line with the new levels. In the end, B decided to abandon the deal and look for a new buyer.With the start of heavier capital gains taxes on owners of multiple homes now just 40 days away, tug-of-war over prices between sellers and buyers is intensifying. As quick-sale properties are snapped up and prices swing sharply in a short period, additional negotiations and resulting conflicts are becoming more frequent.
According to industry sources on the 3rd, transactions have recently increased in land transaction permit zones, and disputes over price between sellers and buyers after a preliminary agreement is signed are spreading.
Under the Oct. 15 real estate measures announced last year, all of Seoul and parts of Gyeonggi Province were designated as land transaction permit zones. In these zones, parties typically sign a preliminary sales agreement first, then obtain approval from the district office, and only afterward conclude the final contract. As a result, there is usually a time gap of about two weeks to as long as one month between the preliminary agreement and the actual transaction.
The problem is that conditions can change dramatically during this period depending on policy developments. If quick-sale asking prices fall following announcements such as the government’s stance on strengthening property holding taxes or higher officially assessed land values, buyers demand price cuts and sellers come back to the table to renegotiate. This tug-of-war over terms is repeated. Because the land transaction permit system leaves deals incomplete even after a price has been set, critics say the risk of price fluctuations is being passed directly onto the parties involved.
On the ground, there are many cases of contracts being canceled or terms being changed. A licensed real estate agent C in Songpa District said, "Some buyers try to use the condition of the home as a pretext to push the price down further, and there are also simple change-of-heart cases where they find a better property elsewhere and want to cancel the deal," adding, "For sellers, waiting for permit approval means losing the chance to sell to others, so they sometimes agree to renegotiate."
Conversely, when home prices rise after a preliminary agreement is signed, there are now cases where sellers demand extra money in the name of consolation or goodwill payments. As prices diverge depending on the timing of the deal, both buyers and sellers are being forced to shoulder greater uncertainty.
The timing of actual transaction price reports is also becoming jumbled, distorting the apparent price trend. Fire-sale transactions at lower prices and previously contracted record-high deals are disclosed around the same time, shaking the market’s reference point for prices.
For an 84-square-meter unit in the Ricentz Apartment Complex in Songpa District, Seoul, four transactions took place in March. Even though prices fell from 3.44 billion won to 2.97 billion won, the lower-priced deals were reported first and the higher-priced ones were disclosed later, adding to confusion about the short-term trend.
Another licensed real estate agent D in Songpa District noted, "Recently, to prevent deals from falling through, some sellers are requiring buyers to pay the entire down payment at the time of the preliminary agreement, effectively setting the deposit higher than usual," and added, "It is also becoming common to include special clauses requiring the parties to sign the final contract within a set period after the land transaction permit is granted."
act@fnnews.com Choi Ah-young Reporter