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For-Sale-by-Owner Platforms and Intermediation Pricing: Evidence from a Natural Experiment

Author

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  • Qiyuan Wang

    (Faculty of Business, Hong Kong Polytechnic University, Kowloon, Hong Kong)

Abstract

Intermediary agents play a crucial role in connecting sellers and buyers across various markets. However, the emergence of digital platforms has provided more affordable channels for direct transactions, challenging the dominance of agents. In this study, we examine the impact of a for-sale-by-owner (FSBO) platform on real estate agents’ listing prices. By using a natural experiment in China, we find that the introduction of the FSBO platform leads to a 2.8% decrease in listing prices, a percentage comparable to the commission rate typically charged by agents. The cost advantage provided by the FSBO platform appears to be the primary driver behind this price drop rather than selection bias in listings. Furthermore, the impact of reduced listing prices extends to the final sales price of the properties. These findings carry important policy implications for competition regulation of intermediaries.

Suggested Citation

  • Qiyuan Wang, 2024. "For-Sale-by-Owner Platforms and Intermediation Pricing: Evidence from a Natural Experiment," Marketing Science, INFORMS, vol. 43(2), pages 346-359, March.
    • Handle: RePEc:inm:ormksc:v:43:y:2024:i:2:p:346-359
    DOI: 10.1287/mksc.2022.0245
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