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

  • Igal Hendel
  • Aviv Nevo
  • François Ortalo-Magné

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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File URL: http://www.nber.org/papers/w13360.pdf
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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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Publication status: published as Hendel, Igal, Aviv Nevo, and François Ortalo-Magné. "The Relative Performance of Real Estate Marketing Platforms: MLS versus FSBOMadison.com." American Economic Review 99, 5 (2009): 1878-1898.
Handle: RePEc:nbr:nberwo:13360
Note: IO PE
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  1. Val E. Lambson & Grant R. McQueen & Barrett A. Slade, 2004. "Do Out-of-State Buyers Pay More for Real Estate? An Examination of Anchoring-Induced Bias and Search Costs," Real Estate Economics, American Real Estate and Urban Economics Association, vol. 32(1), pages 85-126, 03.
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  12. 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.
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  18. Chang-Tai Hsieh & Enrico Moretti, 2002. "Can Free Entry be Inefficient? Fixed Commissions and Social Waste in the Real Estate Industry," NBER Working Papers 9208, National Bureau of Economic Research, Inc.
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