Net Listing
A net listing is a type of listing agreement where the seller specifies a minimum amount they want to receive from the sale, and the listing agent keeps any amount above that figure as their commission. The agent's compensation is not predetermined but depends on their ability to sell the property above the seller's net requirement. This arrangement is prohibited or heavily regulated in many states due to potential conflicts of interest.
Example
“The homeowner agreed to a net listing of $400,000, allowing the agent to keep anything above that amount as commission.”
Memory Tip
In a net listing, the seller says "I want this amount NET of everything else" - it's their bottom-line number.
Why It Matters
Net listings can create ethical issues because agents may have incentives to withhold higher offers or not fully disclose market conditions to maximize their commission. Sellers should understand these risks and verify whether net listings are legal and advisable in their jurisdiction.
Common Misconception
Some sellers believe net listings guarantee they'll receive their desired amount, but the agent is only obligated to use best efforts to achieve that price, not guarantee it.
In Practice
A seller agrees to a net listing wanting to receive $300,000 from their home sale, and the agent sells it for $325,000, keeping the $25,000 difference as commission. However, if the property only sells for $295,000, the seller receives less than their desired amount, and the agent may receive little to no commission.
Etymology
"Net listing" combines "net" meaning "what remains after deductions" with "listing" from Old French "liste" meaning "border" or "edge" - representing the minimum "bottom line" the seller wants to receive.
Common Misspellings
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