What is a 'net listing' and why is it discouraged or illegal in many states?

NET LISTING: An arrangement where the seller sets a NET amount they want to receive, and the broker keeps ANYTHING ABOVE that amount as commission. PROBLEM/CONFLICT OF INTEREST: The broker has an incentive to: set a low net price to ensure a quick sale and large commission; or conceal the property's true value; the broker's interest (maximizing the spread) conflicts with the seller's interest (maximizing their proceeds); the seller may not know the actual sale price or how much commission the broker earned; ILLEGAL/DISCOURAGED: Many states PROHIBIT net listings or heavily restrict them because of this conflict and the potential to exploit unsophisticated sellers; OTHER LISTING TYPES: EXCLUSIVE RIGHT TO SELL (broker earns commission regardless of who sells — most common, most protective for broker); EXCLUSIVE AGENCY (broker earns unless the seller sells it themselves); OPEN LISTING (non-exclusive, multiple brokers, only the procuring broker earns); the net listing's inherent conflict of interest makes it disfavored or illegal; brokers must know listing types and the ethical/legal problems with net listings — a national exam topic.