Will Zillow Make Real Estate Agents Obsolete? This Zicklin Professor Wants to Know
Sophia Gilbukh, Assistant Professor of Real Estate in the William Newman Department of Real Estate, was one of three Zicklin professors awarded a Eugene M. Lang Junior Faculty Fellowship this year. Prof. Gilbukh received funds to complete her research project, entitled “Segmentation in the Housing Market: Will Zillow Make Real Estate Agents Obsolete?” She sat down for a Q&A with Zicklin News.
Zicklin News: Tell us about your research. What’s your hypothesis?
Sophia Gilbukh: My project will investigate the value of real estate agents as intermediaries in the housing market and analyze the inefficiencies arising from the segmented market structure of the databases that these real estate agents use. In the U.S. real estate agents charge a 5 to 6 percent commission fee to help homebuyers and home sellers navigate a housing transaction. Agents claim to add value by having exclusive access to data through Multiple Listing Service Platforms (MLSs), where they provide and get detailed and up-to-date information on current for-sale listings. I will study the relevance of these platforms and, by extension, of real estate agents in improving information frictions in this market. I will also investigate whether the geographical segmentation of MLS platforms leads to inefficiencies due to limited information flows between homebuyers and home sellers across geographical areas.
ZN: How will you conduct this research?
SG: I plan to examine geographical areas where access to the most accurate data requires participating in several MLS platforms. These areas are at the overlap of geographical coverages of several MLS platforms. I conducted several interviews with agents who work in these overlap regions and all said that listing their properties on multiple MLS platforms allows them to reach more potential buyers and significantly improves the sale probability, time on the market, and even prices that a seller can get for their property. In my research project I will evaluate the benefits of complete information by examining listing outcomes of for-sale homes that list with one MLS as compared to those that list in all relevant platforms. If my findings confirm the sentiment of real estate agents, I will argue that MLS platforms are an important source of accurate real estate data that cannot be easily replaced by nationwide technology companies like Zillow, Trulia, and Redfin. I will then build a theoretical model of matching between buyers and sellers to be able to quantify losses in matching efficiency due to the segmented nature of the MLS market structure.
ZN: Have you used your research in class?
SG: I often talk about my research in class. Each year I meet a few students who are licensed real estate agents and it’s very fun and insightful for me to learn about their experiences in the profession.
ZN: Do you plan to submit your paper for publication?
SG: This project is at the very beginning exploratory stage. I will first investigate my hypothesis in the data and write up the findings. Then I hope to get feedback from colleagues and present the findings at a few conferences. Once I incorporate the feedback, I will plan to submit the paper to a journal. Academic research is a slow process, but it allows us time to be careful with our results and methodology.
ZN: As a Eugene M. Lang Junior Faculty Fellow, you received funds to further your research. How will this award help you do that?
SG: The award will help me pay for attending conferences. I also plan to use some of the award to cover journal submission fees.