The More, the Merrier: Agent Connectedness in Real Estate Trading Networks

This study examines whether well-connected real estate agents achieve better listing outcomes by leveraging their networks. Using data from over 40, 000 transactions in Atlanta, Georgia, we measure agent connectedness based on the (standardized) number of agents they have closed deals with in the past. We find that increased connectedness leads to higher sales prices without extending DOM. Specifically, a 1 SD increase in connectedness results in a 2.61% increase in sales price, about $1, 100 on an average $421, 000 home. Our analysis shows that fresh connections are more effective at improving transaction prices. More connected agents can sell unique houses faster without compromising prices, suggesting enhanced information channels as the mechanism. Moreover, connected agents list and sell houses at higher prices with smaller discrepancies between listing and transaction prices, indicating that their networks help set more accurate market values and attract buyers efficiently. These findings highlight the critical role of agent connectedness in improving market efficiency and transaction outcomes through the information channel.