Net Listing
Definition of "Net listing"
Want to know what Net Listing means? Well, Net Listings are a type of listing where the home seller sets a minimum price he/she is willing to sell the property for and whatever amount above that minimum the real estate agent manages to get from a home buyer's offer, becomes the real estate agent’s commission.
Here's an example:
Say home seller comes up to a broker and says " Hey, Broker! I'd like to sell my house. But I can't sell my house for under $100,000; that is my bottom line." If the broker or the real estate agent working with him sells the house for $150,000, their commission will be $50,000.
However, Net Listings are not always recommended, as they very often lead to lawsuits and perceived financial losses. In fact, they are illegal in states like New Jersey, Georgia, and Virginia. In other states like California and Texas, although Net Listings are legal, there are laws that are designed to safeguard both parties from the potential problems of this specific listing. If you are a home seller, you might feel cheated if the house sells for a much bigger amount than what you thought was your house’s real Fair Market Value, and if you are a real estate agent in a Buyer’s Market getting offers that don’t generate good commissions, you might be tempted not to show them to the home seller until you get a good one, so it’s always important to be cautious regarding Net Listings and its conflict of interests.
RealEstateAgent.com ADVICE:
Net Listings are one of the 5 types of Listings. If you are not sure if Net Listings are the right choice for you, check our Glossary Terms for the other four types of Listings: Exclusive Right to Sell Listing, Exclusive Agency Listing, Multiple Listing and Open Listing.
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Comments for Net Listing
I am contemplating to buy a property under Net listing. For clarification, is net listing illegal in California?
Jun 06, 2021 18:01:17Hey James! Thank you for reaching out to us. Regarding net listings, California is not a state in which they are illegal. Keeping that in mind, it's important to note that while net listings are legal in California, because of the risk of a breach of the agent's fiduciary obligations, net listings shouldn't be used in any situation. In California, net listings are usually only used if one is dealing with a highly sophisticated client or for clients who are represented independently. Full disclosure of any conflicts involved is required, however.
Jun 11, 2021 07:06:22Are net listings legal in Georgia?
Nov 21, 2020 23:29:45Hey, James! If you read through our glossary content, you will notice that we mentioned net listings in the state of Georgia. As far as we know, the status of net listings hasn't changed, so our content is up to date.
Nov 23, 2020 07:55:43Are net listings legal in Illinois? If so, are they restricted in any way?
Jul 30, 2020 19:17:34Hey, Jeffrey! Net listings are legal in the state of Illinois, but not recommended because there is a potential for fraud. Also if fraud occurs it is hard to make a case and take it to court. About potential restrictions when it comes to net listings, you might want to reach out to a real estate attorney or check out our article, listings 101 that talks about the different type of listings.
Jul 31, 2020 06:25:06are net listings legal in michigan
Mar 08, 2020 11:51:05Hey Devin,
Net listings provide a potential conflict of interest for the broker. That’s why net listing agreements are considered in many states unprofessional and it constitutes a violation of the Michigan Occupational Code. Therefore, it is illegal in Michigan. If you want to find out more detail about listings, check out our article Listing 101: What you need to know when hiring a real estate agent or broker.
Mar 26, 2020 15:02:05Are net listings allowed in FL and MI?
Feb 04, 2020 15:02:38Hey, Nancy! As we have already mentioned in some comments on the same topic already net listings are illegal in most states. As we speak net listings are not allowed in Michigan but they are still legal in Florida, although they are frowned upon, and they could lead to illegal transactions.
Apr 09, 2020 13:40:06Are net listings legal in NV?
Sep 12, 2019 20:03:04Hello, Roberto! Yes, net listings are currently legal in the state of Nevada. The law or the regulations here do not treat net listings separately which means that real estate agents can sign a net listing agreement without breaking any law. However, you should approach this type of contract with the utmost care and make sure that your client fully understands each clause. You may also read more about listing agreements in our article LISTINGS 101: What You Need To Know When You Hire A Real Estate Agent Or A Broker.
Sep 13, 2019 11:58:00Are net listings illegal in Kentucky
Jan 08, 2019 10:01:13According to 2017 Kentucky PSI Real Estate Exam Prep Questions, Answers & Explanations book published by Real Estate Exam Professionals Ltd., officially, listings based on net price are illegal because they introduce a potential conflict of interest for the broker. They are considered unethical and are illegal in most states.
Jan 09, 2019 04:39:43How can I find guidelines and terms of a net listing?
Oct 16, 2018 10:51:45Hey Julio
Oct 17, 2018 09:40:14thanks for reaching out!
What kind of guidelines and term are you looking for? Since it's a bilateral contract between you and the agent you can have on it whatever you want and the other party agrees to. For the most common or important safeguards on this otherwise very unsafe type of listing, we recommend you get in contact with a real estate lawyer.
On what type of listing may a net listing be used where they are legal?
Jul 26, 2018 09:38:28Hey, Melissa
It's not exactly on what type of listing they can be used. Net Listing IS a type of listing in itself. The problem is that they are not legal in many states. In some, they are legal, but the local board of real estate agents does not recommend it. The truth is that, when it's good, it's great. But when it goes awry, it's awful and one of the parts (home seller or real estate agent) will get the bad end of the stick.
Jul 26, 2018 09:58:05As of the time we write this comment, Florida and California are two states where Net Listings are frowned upon, but legal. And some of them have specific guidelines that need to be followed when doing a Net Listing, otherwise, it becomes an illegal transaction. Your state of Georgia, for instance, does not allow this listing agreement.
Hope we've helped!
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