Unseen, unsold?

Funda is a dominant player among Dutch residential property sites and an almost indispensable link in connecting sellers and buyers. NVM is major shareholder of Funda and NVM members are favoured above VBO brokers on the website. As a result it is more difficult for VBO brokers to advertise their houses through Funda.nl. An analysis of queries by Funda visitors indicates disadvantagement of buyers and sellers, and makes abuse of the dominant position by Funda plausible.

With the advent of the Internet residential property sites became an important link in connecting supply and demand in the housing market. The market for housing information on the Internet is highly concentrated. Funda has a stable market share of almost 60 percent, and is by far the largest player in the market. Although market entry does occur, the position of competitors remains marginal compared to Funda’s position.

It is not surprising that one party takes a dominant position in this market. Buyers and sellers are linked through websites (two-sided market), and the value of the website increases as a greater share of sellers advertises on the website or as a larger share of buyers uses the website (network effects). Network effects in two-sided markets make it very difficult for other residential property websites to compete with the dominant party, Funda in this case. Funda had become a display window in which the vast majority of the potential buyers is looking. An almost indispensable link, not only for buyers and sellers, but also for the brokers who act on behalf of them.

The Dutch Association of Real Estate Brokers and Real Estate Experts (NVM), a sector association of brokers, is the engine behind Funda and is still major shareholder. After a period in which only houses of NVM brokers were shown on the Funda website, since 2007 the supply of other brokers is also included. However, NVM brokers still enjoy preferential treatment. The supply of NVM brokers is always displayed first on the website, regardless of the search criteria of visitors. By giving the NVM brokers a preferential treatment, Funda limits the competition between brokers.

An analysis of queries by Funda visitors shows that a large part of the visitors do not look beyond the first page of the search result. This means that the houses offered by VBO brokers are viewed less than houses of NVM members, within the by Funda visitors chosen set of selection criteria. This makes it more difficult for VBO brokers to put their houses in the shop window through Funda, with possible negative effects on consumers. A lower view ratio leads to a lower selling change, which is enhanced by the other limitations of VBO broker services at the Funda website. Also buyers are disadvantaged, because they get the wrong impression that the houses that best fit the selection are on the first pages, while the VBO supply that follows on later pages fits their criteria just as good or even better.