A Comparison of Real Estate Marketing Systems: Theory and Evidence

Abstract

The objective of this paper is twofold. One is to provide a search-theoretical model of the marketing choice of the seller. The model explains the seemingly contradictory empirical results as to whether a seller raises the price of his house to pass on a portion of the broker's commission to the buyer. The second is to offer empirical evidence on the impact of the MLS on the price. We control for selectivity bias in the data and obtain a surprising result that the decision to use a multiple listing service decreases the sale price of a property.