Are Online-Only Real Estate Marketplaces Viable? Evidence from China

Online businesses have been surging worldwide during the past decade, especially during the recent COVID-19 epidemic. However, the market share of online real estate transactions is still limited, mainly due to the information-asymmetry problem. In this study, we manually collect data on online judicial housing auctions in China, which is currently the largest online real estate market globally, and investigate how information disclosure facilitates real estate transactions. The empirical results suggest that disclosing better quality information online can attract more potential buyers. In particular, providing more comprehensive information such as professional appraisal reports or videos of the property can help to convert buyers' initial interests into completed transactions and higher sales proceeds. The positive effects of information are particularly strong when combined with offline services, in a more mature online market, and for low-value properties. We also provide preliminary analysis of factors affecting online-information-disclosure quality from both the macro and micro perspectives. We also provide preliminary analysis of factors affecting online-information-disclosure quality from both the macro and micro perspectives.