Social Networks and the Success of Market Intermediaries: Evidence From the U.S. Residential Real Estate Industry

Abstract

Market intermediaries are usually thought of as bringing together buyers and sellers. However, intermediaries may also connect these principals with other professionals who can provide assistance with and support for the transaction. We address the question of which set of ties—to buyers and sellers or to other professionals—are more important to the success of market intermediaries, using data from the U.S. residential real estate industry. From a national survey of 525 real estate agents, we find that ties to other professionals are more important than ties to buyers and sellers as predictors of the market intermediary's income, counter to the general wisdom about real estate in particular and market intermediaries more generally. We suggest that the professional networks around market intermediaries may behave like “quasi-firms” helping buyers and sellers navigate complex market transactions.

Keywords:

• economic sociology
• intermediation
• markets
• quasi-firms
• real estate
• social networks

NOTE

ACKNOWLEDGEMENTS

We thank Marcel Allbritton, Bryanne Corderio, Jesse Hedge Hohenstein, Sharoda Paul, and Jennifer Wiley for their help with data collection and analysis. We thank Lynnore Fetyko, Angsana Techatassanasoontorn, Siobhan O’Mahoney, John Jordan, Martin Kilduff, Mark Nadel, Lynette Kvasny, Dawn Russell, Carleen Maitland, Ellen Roche, Paul Bishop, William Arms, Tarlton Gillespie, Jeff Hancock, Poppy McLeod, Laurie Kirsch, Chrisanthi Avgerou, Ben Light, Frances Bell, Bill Dutton, Eric Meyer, Joey George, Matt Willis, Mohammad Hossein Jarrahi, Anand Nantarajan, Linda L. Putnam, Stephen Barley, and Mark Granovetter for comments on previous versions.

FUNDING

This work was supported in part by the U.S. National Science Foundation grants IIS 97-32799 and 00-00178, the National Center for Real Estate Research, the Office of the Dean of the School of Information Studies at Syracuse University, the Maulden-Entergy endowment at the University of Arkansas at Little Rock, and the Greater Syracuse Association of Realtors.

Notes

1. The commercial real estate industry in the United States operates with different regulations regarding the agent–buyer–seller relationship and has different regulations regarding information access. For more details, see Lamb (1997).