TECHNOLOGICAL DISINTERMEDIATION OF REAL ESTATE AGENTS? THE ROLE OF RELATIONSHIPS AND TECHNOLOGY IN AGENTS’ PERFORMANCE

Abstract

Two decades ago, when listing platforms were newly made available to direct buyers and sellers, there were threats of the disintermediation of agents as their monopoly on information is removed. Yet, agents were not disintermediated as they were advantaged with social capital in real estate transactions that were socially embedded. Recently, the question of real estate disintermediation has become relevant as new property technology (such as ChatGPT) attempt to substitute human agents. Amidst two decades of technological progress, this paper revisits real estate social embeddedness theory through a rich LinkedIn profile dataset of agents which reveals the role of relationships and online presence in real estate transactions. This paper finds that relationships have a positive impact on the total volume of transactions brokered. Consistent with brokerage theory which states that agents are incentivised with volume and not prices, the experiment finds that social capital does not impact the value of transactions brokered. This establishes the experiment in sound theoretical reasoning. Additionally, the experiment suggest that educational and ethnic social capital affect the type of properties brokered and thus affect the value of transactions brokered. Minority ethnicity also results in less geographical specialisation indicated by a Ripley K-function cluster analysis. This is likely due to the lack of economies of scale as real estate agents trade on ethnic social networks and minority ethnicities have smaller and lower value markets. Real estate transactions continue to be socially embedded, and it is likely that in the industry, new technologies do not easily disintermediate socially advantaged human agents.