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American Economic Review Vol. 99 No. 5 2009

The Relative Performance of Real Estate Marketing Platforms: MLS versus FSBOMadison.com

Igal Hendel1; Aviv Nevo2; François Ortalo-Magné3

1 Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208. · 2 Department of Economics, Northwestern University, 2001 Sheridan Road, Evanston, IL 60208, and NBER. · 3 Department of Economics and Department of Real Estate and Urban Land Economics, UW-Madison, 5259 Grainger Hall, 975 University Avenue, Madison, WI 53706, and Toulouse School of Economics.

Abstract

We compare house sales on a For-Sale-By-Owner (FSBO) platform to Multiple Listing Service (MLS) sales and find that FSBO precommission prices are no lower, but that FSBO is less effective in terms of time to sell and probability of a sale. We do not find direct evidence of the importance of network size as a reason for the lower effectiveness of FSBO. We do find evidence of endogenous platform differentiation: patient sellers use FSBO while patient buyers transact more often on the MLS (where they avoid patient sellers). We discuss the implications for platform competition, two-sided markets, and welfare.

DOI
10.1257/aer.99.5.1878
Volume
99
Issue
5
Pages
1878-1898
Language
en
Sources
openalex bibtex:phds-export.bib crossref

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