What Problem Do Intermediaries Solve? Evidence From Real Estate Markets

65 Pages Posted: 11 May 2022 Last revised: 13 Nov 2023

See all articles by Darren Aiello

Darren Aiello

Brigham Young University

Mark J. Garmaise

University of California, Los Angeles (UCLA) - Anderson School of Management

Taylor Nadauld

Brigham Young University

Date Written: June 23, 2022

Abstract

We study intermediation in the housing market. Using data from an online platform utilized by real estate agents to generate leads, we identify exogenous intermediary attention arising from the quasi-randomized ordering of potential listings. Greater intermediary attention leads to an increased probability of listing with an agent and selling quickly, and a higher transaction price. The listing and transaction probabilities of neighboring properties decrease in intermediary attention. These results contrast sharply with endogenous correlations and provide causal evidence that intermediaries resolve property-level frictions deriving from search, information, or behavioral considerations but do not mitigate neighborhood-level information asymmetries.

Keywords: Intermediation, real estate, search, information.

JEL Classification: G24, D83, R31

Suggested Citation

Aiello, Darren and Garmaise, Mark J. and Nadauld, Taylor, What Problem Do Intermediaries Solve? Evidence From Real Estate Markets (June 23, 2022). Available at SSRN: https://ssrn.com/abstract=4105923 or http://dx.doi.org/10.2139/ssrn.4105923

Darren Aiello (Contact Author)

Brigham Young University ( email )

United States

HOME PAGE: http://darrenaiello.com

Mark J. Garmaise

University of California, Los Angeles (UCLA) - Anderson School of Management ( email )

110 Westwood Plaza
Los Angeles, CA 90095-1481
United States

Taylor Nadauld

Brigham Young University ( email )

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