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American Economic Review: Vol. 99 No. 5 (December 2009)

The Relative Performance of Real Estate Marketing Platforms:

MLS versus FSBOMadison.com

By Igal Hendel, Aviv Nevo, and François Ortalo-Magné*

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. (JEL

L85, M31, R31)