A listing arrangement where the broker's commission is any amount above a minimum price the seller sets, generally discouraged or prohibited.
Why Net Listing matters on the exam
This term belongs to Contracts. The questions below are real items from Freehold's bank that use it - each one cites its source.
Exam questions using Net Listing
Every Freehold question shows why the right answer is right — and cites its source.
A 'net listing,' in which a broker keeps any sale proceeds above a seller's stated minimum price as commission, is:
Encouraged in all states as the fairest compensation method
Required whenever a seller is unsophisticated
Identical in effect to a standard percentage commission
Prohibited or strongly discouraged in many states
Show answer & explanation
Prohibited or strongly discouraged in many states — Net listings create a built-in incentive for the agent to minimize the seller's proceeds in order to maximize the agent's own commission, which conflicts with the duty of loyalty and is restricted in many states.
Source: PSI National Real Estate Exam Content Outline §5 General Principles of Agency
Which type of listing agreement entitles the broker to a commission regardless of who ultimately finds the buyer, including the seller?
Open listing offered to several brokers
Exclusive agency listing with one broker
Net listing keyed to a minimum seller price
Exclusive right to sell listing
Show answer & explanation
Exclusive right to sell listing — An exclusive right to sell listing guarantees the broker a commission if the property sells during the listing term no matter who procures the buyer, even the seller.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
A net listing, in which the broker keeps any amount received above a minimum price the seller specifies, is generally viewed by regulators as:
The listing type new licensees are generally taught and encouraged to use first, before more advanced arrangements are introduced later in their training
Risky and illegal or discouraged in most states because of potential conflicts of interest
A listing arrangement specifically required under the statute of frauds in most of the US states
Identical in every respect to a standard exclusive right to sell listing agreement
Show answer & explanation
Risky and illegal or discouraged in most states because of potential conflicts of interest — Net listings create an incentive for the broker to withhold information about a property's true market value to maximize personal profit, so many states prohibit or strongly discourage them.
Source: PSI National Real Estate Exam Content Outline §7 Contracts
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