‘Premium’ commonly used in pre-sale rights transactions
If the market price is higher than the sale price, it’s flippy, if it’s lower, it’s mafi.
Beware of illegal possession of ‘chopi’ and ‘hand skin’ transactions
One of the words commonly used in apartment sales rights transactions is ’premium’. You may have heard things like, ‘P is worth 30 million won’ or ‘It’s a mafi item’.
If you have to sell the pre-sale right for various reasons after winning the subscription for an apartment, the terminology used will vary depending on whether you sell it at a higher price than the sale price or sell it at a loss.
What is commonly called ‘P’ in the industry is taken from the first letters of Premium.
If the market price rises higher based on the sale price, it is called ‘Plus Premium’, and if the market price is lower than the sale price, it is called ‘Mapi (Minus Premium)’.
During a period of rising housing prices, competition for subscriptions is fierce for large-scale apartments in prime locations in the metropolitan area, so it is common for pre-sale rights to be traded with a certain number of ‘P’ attached.
If the advertisement for the sale right says ‘P 3000’, it means that a premium of 30 million won has been added to the sale price.
Mafi is the opposite. If the seller sells the pre-sale right in a hurry due to circumstances, he or she sells it at a lower price than the pre-sale price, which is called ‘mafi’.
Recently, as lending regulations have been strengthened, ‘mafi’ properties are coming up for sale in complexes that are about to move in, even in the metropolitan area.
‘Chopi (initial premium)’ refers to the case where pre-sale rights are sold with a P attached immediately after the announcement of the subscription winner but before the contract is signed.
This is usually done in a complex where market profits are expected, and the winner of the subscription receives a down payment and a certain premium from the buyer, signs a contract, and then changes the name. However, you must be careful as the transaction is illegal because it is done in a borrowed name or in cash.
‘Loss fee’ means ‘premium remaining at hand’, and refers to the premium remaining after the buyer pays all of the seller’s capital gains tax, etc.
It is used when the buyer pays all transfer taxes and incidental expenses to reduce the burden on the seller, who incurs significant capital gains tax due to a pre-sale right transaction.
However, caution must be exercised as ‘loss of money’ transactions are mostly carried out in the form of down contracts, and if detected, additional taxes and fines may be imposed.
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How can buyers protect themselves in “chopi” transactions?
Interview Between Time.news Editor and Real Estate Expert
Editor: Welcome to Time.news! Today, we’re diving into the intriguing world of pre-sale rights in real estate transactions, specifically around the concepts of “premium” and “mafi.” I’m here with our expert, Dr. Kim, a seasoned real estate analyst. Thank you for joining us, Dr. Kim!
Dr. Kim: Thank you for having me! It’s exciting to explore such a relevant topic in today’s housing market.
Editor: Let’s start with terminology. I understand “premium” is a common term in pre-sale rights. Could you break down what it means and why it’s so significant?
Dr. Kim: Absolutely! In the context of real estate, “premium,” often shortened to “P,” refers to the additional value that a pre-sale right brings when the market price of an apartment exceeds the original sale price. For instance, if a seller lists their pre-sale right with a “P 3000,” it indicates a premium of 30 million won over the sale price. This is especially common in areas where demand outstrips supply, such as metropolitan regions.
Editor: And what happens when the market price drops below the sale price? How does that work?
Dr. Kim: That’s what we call ”mafi” or “Minus Premium.” In situations where sellers may urgently need to offload their pre-sale rights due to financial pressures or other circumstances, they might sell at a loss. This has become increasingly common, particularly in the wake of stricter lending regulations, which have made it harder for buyers to secure financing.
Editor: That brings us to the topic of “chopi” transactions. Can you explain what these are and why potential buyers need to be cautious?
Dr. Kim: Certainly! “Chopi” refers to the practice of selling pre-sale rights with a premium right after the subscription winner is announced but before the official contract is signed. This often occurs in complexes expected to generate market profits. While it may seem advantageous, it is crucial for buyers to be cautious—these transactions are frequently illegal, as they can involve cash payments or be conducted under borrowed names to bypass regulations.
Editor: So essentially, while “chopi” can offer immediate benefits, it also carries significant risks, particularly legally. What should buyers keep in mind?
Dr. Kim: Exactly! Buyers should approach “chopi” transactions with heightened scrutiny. Not only can they lead to legal repercussions, but the potential for inflated prices can leave buyers exposed. It’s essential to fully understand the terms and ensure that the transaction complies with all legal regulations.
Editor: Interesting! Lastly, could you explain what the term “loss fee” means in this context?
Dr. Kim: Sure! The ”loss fee” relates to the remaining premium after the buyer has covered all the seller’s capital gains tax and other related expenses. It’s often a strategy used to alleviate the tax burden on sellers during a pre-sale rights transaction. However, much like “mafi,” it’s crucial for both parties to engage in transparency during these transactions, as it can lead to complications if not done correctly.
Editor: Thank you, Dr. Kim! This has been a fantastic overview of the complexities surrounding pre-sale rights transactions. Understanding these nuances is vital for anyone involved in the real estate market today.
Dr. Kim: Thank you for the opportunity! It’s a pleasure to share insights into this important topic.
Editor: And thank you to our audience for tuning in! Keep an eye on our future discussions as we continue to explore key trends and insights in real estate. Until next time!