[Report] "Can I Really Buy Cheap?" Intense Psychological Battle as the Auction House Fills with First-Time Homebuyers

Winning Bids as Low as One-Third of Appraised Value for Properties Valued at Over 1.8 Billion Won
From Veteran Investors to Victims of Rental Scams, All Locked in Fierce Competition
Auction Registration Surges 61.5% Last Year Compared to 2022 <

"Right now, the auction house is a league for the cash-rich."

At around 11 a.m. on the 23rd, in courtroom 112 of the Seoul Southern District Court auction house in Yangcheon-gu, Seoul, Mr. Yoo (55), who won the bid for a neighborhood facility in Oryu-dong, Guro-gu, Seoul, at 675.4 million won, shared this remark. The appraised value of the property was as high as 1,878.99 million won. The building's minimum bid price had dropped to 615.71 million won after five failed auctions. Mr. Yoo, who traveled from Gwangju to participate, said, "I've made solid profits several times through auction investments," adding with a satisfied look, "For this building, I plan to realize a capital gain after redevelopment."

On the morning of the 23rd at around 10 a.m., bidders were waiting for the auction to start at the Seoul Southern District Court auction courtroom in Yangcheon-gu, Seoul. When the bid opening began, the courtroom was once filled with about 70 people. Photo by Jiyé Lee

There were also people who came to the auction court for somewhat desperate reasons. Mr. Cho (36), who seemed unfamiliar with the process and repeatedly checked his documents, asked the reporter, "Is this the right way to fill out these papers?" He said he lost a deposit of 160 million won due to a jeonse fraud and was participating in the auction of the house he had been renting. Mr. Cho said, "It's my first time at the court, but I thought that if I win the bid for the house that went to auction, I might be able to recover at least some of my losses."

The more than 70 people gathered in the courtroom, each with their own goals, engaged in an intense game of psychology. There was a middle-aged woman looking at a villa as a wedding gift for her son, young people hoping to secure their own homes through the auction process, and investors seeking a profit from price differences. Mr. Kim, in his 60s, who said he has distributed auction newsletters for over 30 years, commented, "There aren't many properties today, so there are fewer people," and explained, "On popular days, hundreds of people pack the courtroom to the point of bursting."

On the morning of the 23rd, bidding documents received by a bidder at the auction court of the Seoul Southern District Court in Yangcheon-gu, Seoul. The auction bid prices are kept confidential until the bid opening. Photo by Jiyé Lee

With everyone from those seeking to grow their assets to those searching for housing stability flocking to the auction court, the venue is drawing attention as a microcosm of the real estate market. Unlike in the past, when it was noted as a niche investment opportunity because the land transaction permit system's (LTPS) occupancy requirement did not apply, the environment has shifted mainly toward non-homeowners aiming to buy their first home after the implementation of heavier taxes on owners of multiple properties. However, it has been pointed out that polarization is emerging in the auction market as well, as stricter lending regulations favor bidders with substantial financial resources.

According to the Court’s Registry Information Plaza on the 26th, the number of applications for ownership transfer registration through auction or public sale reached 5,328 cases as of May this year. This is a 61.5% surge in four years, compared to 3,300 cases in 2022. The number has continued to rise every year, with 3,141 in 2023, 4,137 in 2024, and 4,635 last year. On the day the reporter visited the auction court, a villa in Doksan-dong, Geumcheon-gu, Seoul, where a redevelopment project is planned, attracted six bidders and was sold for 310.34 million won. This was 47.34 million won above the appraised value of 263 million won, resulting in a bid-to-appraisal ratio of 118.0%.

The court auction operates by having bidders write their desired price on paper and submit it confidentially, all at once. The person who writes the highest amount wins the bid, making for an intense psychological battle. Once submitted, the bid form cannot be amended or withdrawn. Mr. Lee, in his 60s, who participated in a vehicle auction, bid 29.1 million won for a Kia Sorento with a minimum bid price of 24.8 million won, but could not smile even after hearing he had won. This was because he was the only bidder, despite writing a higher price. Mr. Lee said, "Last time, I lost out to someone with a higher bid, so I offered 5 million won more today," adding, "But today, my strategy completely failed," closing his eyes in regret.

Of the 72 properties up for auction that day, only 15 actually received bids. The number of bidders per property was just one to six. Many of those filling the courtroom were 'auction tour' participants there to learn. Ye-ryung Han (28), who operates a real estate community, said, "As jeonse listings decrease and anxiety grows that home prices will rise further, people see auctions as an alternative way to own a home," adding, "The youngest attendee is someone born in 2004." Math instructor Ms. Yeo (52) said, "I studied auctions through YouTube, but I was curious about the real atmosphere, so I came to the site."

The problem is that as more people enter the auction market, the gap based on financial capacity is also widening. While those who find it hard to enter the regular sales market are turning to auctions, they are still restricted by the government's lending regulations. Actual end-users who do not own a home and must rely on loans find it difficult to participate in bidding. This is mainly because the threshold for "auction balance loans," which are loans to pay the remaining balance after a successful bid, has become much higher. Banks determine loan limits not only based on the winning bid price, but also by considering seniority of claims and the portion of tenant deposits that need to be protected.

Mr. Yoo, who earlier won the bid for the Oryu-dong neighborhood facility, pointed out, "In my experience, overall competition and bid prices are falling due to loan restrictions," adding, "Even tenants who have not recovered their deposits are likely to be affected."

28-year-old Ye-ryung Han, who runs the 2030 Real Estate Community, is showing her social networking service (SNS) account. Known as "Lena," Han introduced that the community she operates has reached 1,500 members. Photo by Ji-ye Lee

Several experts have diagnosed that as long as lending regulations persist, the gap based on financial capacity in the auction market is inevitable. In particular, they point out that, depending on the rights associated with the property, unexpected burdens such as liens may arise, so it is risky to participate simply because one expects to acquire property below market value.

Kang Sungjin, professor of economics at Korea University, said, "Just as in the real estate market, the more the government tightens lending, the more people who need to borrow suffer," adding, "Since these policies are meant to manage household debt, it will not be easy to ease the regulations in the auction market alone." Kang Insu, professor of economics at Sookmyung Women's University, said, "It is positive that people are interested in the auction market as a way to own a home," but also emphasized, "You need to carefully assess your financial situation and thoroughly prepare before participating."

Meanwhile, a recent incident at the Seoul Southern District Court saw an apartment at Yeongdeungpo Art Xi (exclusive area 143㎡), appraised at 1,880 million won, being awarded at 17,296 million won. It was reported that the bidder tried to write 1,729.6 million won but added an extra '0' by mistake. If the winning bidder gives up the contract, the deposit of about 150 million won will be forfeited. The buyer filed an objection to the sale approval and submitted a petition, but it was reportedly not accepted.

This content was produced with the assistance of AI translation services.