247SimpleTests
Real Estate · State License Law and Commission

What is a 'net listing' and why is it problematic?

Reviewed by Jordan Morley, Editorial Lead at 247SimpleTests. Written by the 247SimpleTests Editorial Team from the official source material cited on every question.

Correct answer

A listing agreement where the broker keeps everything above a specified net amount as their commission — the broker has an incentive to sell for the highest possible price, but the structure creates conflicts of interest and is illegal in some states

  1. A A listing that guarantees a minimum sale price
  2. B A listing where the broker networks with other agents to find buyers
  3. C A listing on the internet
  4. D A listing agreement where the broker keeps everything above a specified net amount as their commission — the broker has an incentive to sell for the highest possible price, but the structure creates conflicts of interest and is illegal in some states

Why this is the answer

Net listing: The seller specifies a minimum 'net' they want from the sale; the broker keeps everything above that net as commission. Example: seller wants $400,000 net; broker sells for $450,000; broker keeps $50,000 commission.

Problems: Conflict of interest — the broker is incentivized to negotiate the highest possible price (helps themselves) but may also be tempted to not disclose a higher offer they could have gotten; the seller may not understand the full implication; potential for fraud if the broker inflates the sale price artificially in collusion with buyers.

Status: Net listings are ILLEGAL in several states (California, Colorado, Georgia, others); legal but disfavoured in others; considered unethical by NAR regardless of legality. In states where legal, strict disclosure requirements apply.

Source: Real Estate State Exam, Net Listing

Practice more questions

This question is from our Real Estate License Practice Tests practice test. Take the full practice test to test your knowledge across all State License Law and Commission and other topics.

Take the Salesperson (State Law) practice test →

About this topic: State License Law and Commission

State license law and commission questions cover who must be licensed, exemptions, license types and renewal, continuing education, the real estate commission's powers and the grounds for discipline. This is one of 34 Salesperson (State Law) questions on state license law and commission, each with a full explanation on a single study page.

New to this exam? Our Real Estate exam guide explains the format, scoring, and how to prepare.

Related questions

State License Law and Commission

Who is typically responsible for regulating real estate licensees in each state?

 State License Law and Commission

What is the typical minimum education requirement before a person can take the salesperson licensing exam?

 State License Law and Commission

Under most state license laws, who can a salesperson collect a real estate commission FROM?

 State License Law and Commission

How is a real estate license typically renewed?

State-specific guides

Need information for your state? Our state guides cover local requirements, fees, and what to expect on exam day.

California Texas Florida New York Pennsylvania Illinois Ohio Georgia

Recommended study materials

Study guide

Real Estate License Exam Prep 3rd Ed. (Performance Programs)

National and state portion prep, contracts, agency law, fair housing, and math — the industry standard.

Check Price → Study guide

Modern Real Estate Practice 21st Ed. (Dearborn)

The most widely used real estate principles textbook: principles, law, practice, and math in one volume.

Check Price → Study guide

Real Estate Math Express (Dearborn)

Commission calculations, financing, proration, area, and all exam math explained step by step.

Check Price →

As an Amazon Associate, CJ Affiliate, and AWIN publisher we earn from qualifying purchases. Links above are affiliate links. Full disclosure →