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

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.