Working Paper: NBER ID: w13360
Authors: 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.
Keywords: real estate; marketing platforms; MLS; FSBO
JEL Codes: L14; L85; R31
Edges that are evidenced by causal inference methods are in orange, and the rest are in light blue.
| Cause | Effect |
|---|---|
| MLS is a more effective matching platform (C78) | FSBO does not exploit economies of scale (L85) |
| MLS listings (L85) | sale price (D49) |
| FSBO listings (L85) | sale price (D49) |
| MLS listings (L85) | faster sales (L81) |
| time to sell for FSBO listings (L85) | MLS listings (L85) |
| MLS listings (L85) | selection bias (C24) |