How Does Online Information Influence Offline Transactions: Insights from Digital Real Estate Platforms

Information Systems Research, Forthcoming

41 Pages Posted: 4 Jun 2023

See all articles by Zhengrui Jiang

Zhengrui Jiang

Iowa State University - College of Business

Arun Rai

Georgia State University - J. Mack Robinson College of Business

Hua Sun

Iowa State University

Cheng Nie

Iowa State University

Yuheng Hu

University of Illinois at Chicago, College of Business Administration

Date Written: May 30, 2023

Abstract

Digital platforms facilitate the flow of information and the execution of transactions. This study investigates the impact of signals from platform-provided online information regarding search and experience attributes of products on the prices of their offline transactions. We situate our theorizing and empirical work in the context of digital real estate platforms. Our results suggest that online information pertaining to properties’ experience attributes has a significant influence on the prices of offline property transactions. The amount of online information relating to experience attributes, specifically length of textual property description and the number of photos positively influences the sale price of a property. In contrast, the amount of online property information related to search attributes, specifically facts and features, has no significant influence on the property’s sale price. In addition, online property information on experience attributes has a significant impact on the sale price of uncommon properties (those valued significantly above or below their neighborhood averages) while its impact on the price of common properties (those valued close to their neighborhood averages) is insignificant. The findings are robust to various model specifications and across property transactions in different years, seasons, and geographical regions. They are also neither subject to confounding effect of real estate agents’ service quality nor driven by unobserved property heterogeneities. The findings shed light on how signals from online property information are used by home buyers and sellers for different types of properties. The insights have implications for how real estate professionals can better utilize digital platforms to convey signals regarding properties and facilitate property transactions, and for how the platforms can be designed to support the exchange of information that provides signals on the quality of offline goods that are highly risky and experiential.

Keywords: Real estate platform, digital platform, signals, property information, Zillow, property price

JEL Classification: M21

Suggested Citation

Jiang, Zhengrui and Rai, Arun and Sun, Hua and Nie, Cheng and Hu, Yuheng, How Does Online Information Influence Offline Transactions: Insights from Digital Real Estate Platforms (May 30, 2023). Information Systems Research, Forthcoming, Available at SSRN: https://ssrn.com/abstract=4466321

Zhengrui Jiang

Iowa State University - College of Business ( email )

Ames, IA 50011-2063
United States

Arun Rai

Georgia State University - J. Mack Robinson College of Business ( email )

P.O. Box 4050
Atlanta, GA 30303-3083
United States

Hua Sun

Iowa State University ( email )

Ames, IA 50011-2063
United States
1-5152947514 (Phone)

Cheng Nie (Contact Author)

Iowa State University ( email )

Ames, IA 50011-2063
United States

HOME PAGE: http://https://chengnie.com

Yuheng Hu

University of Illinois at Chicago, College of Business Administration ( email )

601 S Morgan St
Chicago, IL 60607
United States

HOME PAGE: http://yuhenghu.com

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