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

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  • Igal Hendel
  • Aviv Nevo
  • François Ortalo-Magné

Abstract

We compare outcomes obtained by sellers who listed their home on a newly developed For-Sale-By-Owner (FSBO) web site versus those who used an agent and the Multiple Listing Service (MLS). We do not find support for the hypothesis that listing on the MLS helps sellers obtain a significantly higher sale price. Listing on the MLS shortens the time it takes to sell a house. The diffusion of the new FSBO platform was quick, with the market share stabilizing after 2 years, suggesting it managed to gain a critical mass necessary to compete with the MLS. However, the lower effectiveness of FSBO (in terms of time to sell and probability of a sale) suggests that the increasing returns to network size are not fully exploited at its current size. We discuss the welfare implications of our findings.

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Bibliographic Info

Paper provided by National Bureau of Economic Research, Inc in its series NBER Working Papers with number 13360.

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Date of creation: Sep 2007
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Handle: RePEc:nbr:nberwo:13360

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Cited by:
  1. Maria Eugénia Sanin, 2009. "Choosing a trading counterpart in the U.S. acid rain market," Working Papers hal-00437636, HAL.
  2. Simon Loertscher & Andras Niedermayer, 2012. "Assessing the Performance of Simple Contracts Empirically:The Case of Percentage Fees," Department of Economics - Working Papers Series 1163, The University of Melbourne.
  3. Panle Jia Barwick & Parag A. Pathak, 2011. "The Costs of Free Entry: An Empirical Study of Real Estate Agents in Greater Boston," NBER Working Papers 17227, National Bureau of Economic Research, Inc.
  4. Genesove, David & Han, Lu, 2012. "Search and matching in the housing market," Journal of Urban Economics, Elsevier, vol. 72(1), pages 31-45.
  5. Xianwen Shi & Aloysius Siow, 2010. "Information Externalities and Intermediaries in Frictional Search Markets," Working Papers tecipa-398, University of Toronto, Department of Economics.
  6. Simon Loertscher & Andras Niedermayer, 2007. "When is Seller Price Setting with Linear Fees Optimal for Intermediaries?," Department of Economics - Working Papers Series 1014, The University of Melbourne.
  7. Wong, Maisy, 2013. "Estimating the Distortionary Effects of Ethnic Quotas in Singapore Using Housing Transactions," MPRA Paper 51217, University Library of Munich, Germany.
  8. Simon Loertscher & Andras Niedermayer, 2008. "Fee Setting Intermediaries: On Real Estate Agents, Stock Brokers, and Auction Houses," Discussion Papers 1472, Northwestern University, Center for Mathematical Studies in Economics and Management Science.
  9. B. Douglas Bernheim & Jonathan Meer, 2008. "Do Real Estate Brokers Add Value When Listing Services Are Unbundled?," NBER Working Papers 13796, National Bureau of Economic Research, Inc.
  10. Derek G. Stacey, 2012. "Information, Commitment, and Separation in Illiquid Housing Markets," Working Papers 1289, Queen's University, Department of Economics.
  11. Loertscher, Simon & Niedermayer, Andras, 2012. "Fee-Setting Mechanisms: On Optimal Pricing by Intermediaries and Indirect Taxation," Discussion Paper Series of SFB/TR 15 Governance and the Efficiency of Economic Systems 434, Free University of Berlin, Humboldt University of Berlin, University of Bonn, University of Mannheim, University of Munich.
  12. Estelle Cantillon & Pai-Ling Yin, 2011. "Competition between Exchanges: A research Agenda," ULB Institutional Repository 2013/99386, ULB -- Universite Libre de Bruxelles.
  13. B. Douglas Bernheim & Jonathan Meer, 2007. "How Much do Real Estate Brokers Add? A Case Study," Discussion Papers 06-041, Stanford Institute for Economic Policy Research.
  14. Keith Ihlanfeldt & Tom Mayock, 2012. "Information, Search, and House Prices: Revisited," The Journal of Real Estate Finance and Economics, Springer, vol. 44(1), pages 90-115, January.
  15. Seth M. Freedman & Ginger Zhe Jin, 2011. "Learning by Doing with Asymmetric Information: Evidence from Prosper.com," NBER Working Papers 16855, National Bureau of Economic Research, Inc.
  16. Lu, Xun & White, Halbert, 2014. "Robustness checks and robustness tests in applied economics," Journal of Econometrics, Elsevier, vol. 178(P1), pages 194-206.

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