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Importance of Professional Networks in Trade: Evidence from Real Estate Market

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  • Jia Xie

Abstract

Real estate agents often search randomly or navigate through local network to find trading partners. This article estimates the importance of network‐based searches relative to random searches by fitting Jackson–Rogers' model to the multiple listing service data for a major Midwestern city in the United States. We find that 35%–55% of trades are made through network‐based searches. Moreover, agents rely mainly on random searches at early stage of career, but more on network‐based searches after having many trades. On average, a real estate agent trades with 1 out of every 5–10 agents she finds through searches.

Suggested Citation

  • Jia Xie, 2022. "Importance of Professional Networks in Trade: Evidence from Real Estate Market," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 50(3), pages 882-900, September.
    • Handle: RePEc:bla:reesec:v:50:y:2022:i:3:p:882-900
    DOI: 10.1111/1540-6229.12295
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    References listed on IDEAS

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    Cited by:

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    2. Peter Chinloy & Cheng Jiang & Kose John, 2022. "Spreads and Volatility in House Returns," JRFM, MDPI, vol. 15(8), pages 1-16, August.

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