Why Is Intermediating Houses So Difficult? Evidence from iBuyers

We study frictions in dealer intermediation in durable goods markets using iBuyers, technology-driven intermediaries providing liquidity through rapid algorithmic transactions. iBuyers earn positive spreads, bypass slow bilateral search, but operate primarily in liquid, easy-to-value segments. We develop and calibrate a dynamic search model where intermediaries face adverse selection from imperfect valuation. Faster transactions increase liquidity but reduce information, limiting intermediation. iBuyers offer a partial solution, enabling speed with limited information loss but only where assets are homogeneous and liquid. Extending the model across durable goods highlights how valuation difficulty, liquidity, and subjective value dispersion jointly determine the scope of intermediation.