How Does Online Information Influence Offline Transactions? Insights from Digital Real Estate Platforms

Digital platforms facilitate the flow of information and the execution of transactions. This study investigates the impact of signals from platform-provided online information regarding search and experience attributes of products on the prices of their offline transactions. We situate our theorizing and empirical work in the context of digital real estate platforms. Our results suggest that online information pertaining to properties' experience attributes has a significant influence on the prices of offline property transactions. The amount of online information relating to experience attributes-specifically, length of textual property description and the number of photos-positively influences the sale price of a property. In contrast, the amount of online property information related to search attributes-specifically, facts and features-has no significant influence on the property's sale price. In addition, online property information on experience attributes has a significant impact on the sale price of uncommon properties (those valued significantly above or below their neighborhood averages), whereas its impact on the price of common properties (those valued close to their neighborhood averages) is insignificant. The findings are robust to various model specifications and across property transactions in different years, seasons, and geographical regions. They are also neither subject to confounding effect of real estate agents' service quality nor driven by unobserved property heterogeneities. The findings shed light on how signals from online property information are used by home buyers and sellers for different types of properties. The insights have implications for how real estate professionals can better utilize digital platforms to convey signals regarding properties and facilitate property transactions and for how the platforms can be designed to support the exchange of information that provides signals on the quality of offline goods that are highly risky and experiential.