Importance of Social Networks in Real Estate Brokerage

In this paper, we aim to analyze the importance of traditional social networks in selling real estate. In recent years, the use of various social networking sites like FaceBook, LinkedIn is ubiquitous, to the extent that these social networking sites are now commonly used as a tool by real estate brokers to expand and maintain their client network. However, the use of social networks as a link to establish business opportunities is not new. In a business context, business associations, university alumnus gatherings, cultural associations, country clubs, etc., are avenues where business contacts can be formed. Thus, in this paper we are interested in exploring the question of whether a more 'traditional' social network has an impact on a real estate broker's sale performance. More specifically, we are interested to see whether 'culture' affects sales performance.In the extant literature, there is a rich literature on real estate brokerage that analyzes agent's performance, listing and selling of the properties through the multiple listing services, the impact of incentives (commission) on agent's performance, and the asymmetric problem for a property sold by owners and for a property sold by agents. There are also papers that analyse, from an information angle, the impact of the use of internet on sales performance. In this paper, we look into the question of whether real estate brokers close more deals with people of their own cultural background. We intend to analyse this question by employing both a regression and probit model to examine the significance of a common cultural background on a real estate broker's sale performance.