The Impact of E-Information on Residential Real Estate Services: Transaction Costs, Social Embeddedness, and Market Conditions

By Saber, Jane Lee; Messinger, Paul R | Canadian Journal of Administrative Sciences, March 2010 | Go to article overview

The Impact of E-Information on Residential Real Estate Services: Transaction Costs, Social Embeddedness, and Market Conditions


Saber, Jane Lee; Messinger, Paul R, Canadian Journal of Administrative Sciences


Abstract

This paper examines the possibility of disintermediation of residential real estate agents arising from increased customer access to property information on the Internet (e-information). The transaction cost viewpoint suggests that since customers now have ready access to e-information without an agent, customer-perceived value of agents and agent usage will decline. The social embeddedness perspective, by contrast, suggests that these changes are unlikely because the added value of agents goes beyond mere information aggregation and includes essential transaction activities that are embedded in social networks. A survey of buyers and sellers of real estate in Alberta provides partial support for the transaction cost viewpoint. However, buyers and sellers respond differently to market conditions (slow versus hot markets) in their proclivities to use real estate agents.

Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.

Keywords: residential real estate, disintermediation, re-intermediation, social embeddedness, transaction costs, web-experience, market conditions

Résumé

Cet article examine comment l 'accès accru à I 'information sur l'immobilier via Internet (e-information) entraîne la désintermédiation des agents d'immeubles résidentiels. La perspective du coût de transaction montre que dans la mesure les clients ont facilement accès aux informations électroniques sans avoir besoin de passer par un agent, la valeur et l'usage des agents décroit. La perspective de l'enracinement social par contre indique que ces changements sont d'autant plus improbables que la valeur ajoutée des agents va au-delà du simple regroupement d'informations, pour intégrer des activités transactionnelles essentielles ancrées dans les réseaux sociaux. Une enquête menée auprès des acheteurs et des vendeurs de propriétés immobilières en Alberta permet d'appuyer partiellement la thèse du coût de transaction. Cependant, les acheteurs et les vendeurs réagissent différemment aux conditions du marché (morose ou en bonne santé) dans leur propension à recourir aux agents immobiliers. Copyright © 2010 ASAC. Published by John Wiley & Sons, Ltd.

Mots-clés : agents d'immeubles résidentiels, désintermédiation, ré-intermédiation, enracinement social, coûts des transactions, usage de l'Internet, conditions du marché

Disintermediation is "the elimination or displacement of market intermediaries, enabling direct trading between buyers and sellers" (Wigand, 1997), and reintermediation is the "replacement of current intermediaries with lower priced, unbundled service intermediaries" (Baen & Guttery, 1997). This paper examines whether changing information technologies are giving rise to disintermediation or re-intermediation, away from the services of real estate agents, in the residential real estate industry. Statistics in 2006 indicate that thirty-six million unique visitors per month entered real estate websites and 70% of customers searched for properties on the Internet as compared to approximately sixteen million visitors and 30% of customers in 2001 (Cruzen, 2006). Now, even before contacting an agent, potential buyers and sellers can easily and effectively find and compare properties, locations, prices, and much other real estate "e-information" - all with the click of a mouse (Gwin, 2004; Miles, 2000; Muhanna, 2000). The increased ability to use the Internet in this way may decrease the customer-perceived value of an agent, which could lead to reduced agent utilization and disintermediation or reintermediation away from the services of traditional real estate agents.

The travel industry is an example of such disintermediation and re-intermediation as travellers now often use Internet-based, self-service search and purchase methods to buy directly from airlines, hotels, or tour providers (disintermediation) or, alternatively, to purchase travel products from low-priced, limited-service intermediaries, such as expedia.

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