How Effective is the Online Real Estate Transaction Platform? Evidence from China
48 Pages Posted: 17 Feb 2021
Date Written: February 17, 2021
Online businesses have been surging worldwide during the past decade, especially during the recent COVID-19 epidemic. However, the market share of online real estate transactions is still limited, mainly due to the information-asymmetry problem. In this study, we manually collect data on online judicial housing auctions in China, which is currently the largest online real estate market globally, and investigate how online information disclosure helps facilitate online real estate transactions. The empirical results suggest a higher quality of online information disclosure can significantly help attract potential buyers. In particular, providing more comprehensive information such as professional appraisal reports or videos can help convert buyers’ initial interests to actual transaction participation, leading to higher success probabilities and transaction prices. Such an information effect is particularly strong when combined with offline services, or in a more mature online market, or for lower-value properties. We also provide a preliminary analysis of factors affecting online-information-disclosure quality. The findings provide evidence on the feasibility of online real estate transactions and deliver suggestions for the future development of the emerging online real estate market.
Keywords: online business, information, real estate transactions
JEL Classification: G14, M37, R31
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