Which listing is a violation of Tennessee license law?
Audio Lesson
Duration: 2:40
Question & Answer
Review the question and all answer choices
Net Listing
Multiple Listing
Multiple Listing is not prohibited; it's a cooperative system where brokers share listings and compensation, which benefits both sellers and agents by increasing exposure to potential buyers.
Exclusive Agency
Exclusive Agency listings are permitted in Tennessee; they allow the seller to sell the property without paying commission but still require the seller to pay the broker if the broker finds the buyer.
Exclusive Right to Sell
Exclusive Right to Sell is the most common listing type and is fully compliant with Tennessee law; it guarantees the broker a commission regardless of who finds the buyer during the listing term.
Why is this correct?
Net listings are prohibited.
Deep Analysis
AI-powered in-depth explanation of this concept
This question tests your understanding of Tennessee real estate license law, specifically regarding prohibited listing types. In real estate practice, listing agreements form the foundation of the agent-client relationship, and understanding which types are illegal is crucial for ethical compliance and avoiding disciplinary action. The question identifies net listings as prohibited, which is a key concept in many states' real estate laws. To arrive at the correct answer, we must recognize that net listings create a conflict of interest because the agent's commission isn't fixed but becomes the difference between the property's sale price and a minimum net amount to the seller. This creates an incentive for the agent to accept lower offers to increase their commission. The other options (Multiple Listing, Exclusive Agency, and Exclusive Right to Sell) are all legitimate listing types commonly used in real estate practice. This question is challenging because it requires knowledge of specific state regulations rather than general real estate principles, and students may confuse net listings with other commission structures or be unaware of their prohibition in Tennessee.
Knowledge Background
Essential context and foundational knowledge
Net listings are prohibited in most states, including Tennessee, because they create a fundamental conflict of interest between the agent and client. In a net listing, the seller sets a minimum acceptable price (net amount), and the agent keeps any amount above that as their commission. This structure incentivizes the agent to accept lower offers to increase their commission, potentially at the seller's expense. The prohibition exists to protect consumers from unethical practices and ensure agents act in their clients' best interests. Tennessee's real estate licensing law explicitly prohibits net listings to maintain professional standards and protect sellers from potential exploitation.
Podcast Transcript
Full conversation between instructor and student
Instructor
Hey there! Welcome back to the Real Estate License Exam Prep Podcast. I see you've got a question about the practice of real estate in Tennessee. Let's dive in, shall we?
Student
Absolutely, I've been working on this one for a while. The question is, "Which listing is a violation of Tennessee license law?" And the options are: A. Net Listing, B. Multiple Listing, C. Exclusive Agency, and D. Exclusive Right to Sell.
Instructor
Great question! This is actually a medium difficulty question that tests your knowledge of Tennessee real estate license law. It's focusing on the types of listings that are prohibited. So, why don't you take a guess?
Student
Hm, I'm leaning towards A, the Net Listing, because it seems a bit dodgy. But I'm not sure.
Instructor
Exactly! And that's the right approach. This question is about recognizing the conflict of interest in a net listing. It's a prohibited listing because the agent's commission isn't fixed; it's the difference between the property's sale price and a minimum net amount to the seller. This can incentivize the agent to accept lower offers to increase their commission.
Student
Oh, that makes sense. So, it's not like the other options, right? Because those are all legitimate?
Instructor
Exactly! Multiple Listing is a cooperative system where brokers share listings and compensation, which benefits both sellers and agents. Exclusive Agency listings are permitted in Tennessee; the seller can sell the property without paying a commission but still has to pay the broker if they find the buyer. And Exclusive Right to Sell is the most common listing type, where the broker gets a commission regardless of who finds the buyer.
Student
Got it. So, how do I remember why net listings are illegal in Tennessee?
Instructor
I've got a memory technique for you. Think of a net listing like a fishing net where the agent keeps only the fish that jump above a certain height, leaving smaller ones for the seller. It's a bit like the agent is keeping the "big fish," or the higher sale price, and letting the seller have the "small fish," or the lower price.
Student
That's a clever analogy! It'll stick in my mind. Thanks for that.
Instructor
You're welcome! Just remember, when you encounter listing questions, flag any option mentioning 'net' as potentially prohibited. It's a quick way to recognize that it might be illegal in Tennessee.
Student
Thanks for the tip! I'll keep that in mind. Any final words of encouragement before we wrap up?
Instructor
Just keep practicing and studying, and you'll ace this exam. Real estate law can be tricky, but with the right mindset and preparation, you can conquer it. Keep up the great work, and we'll see you next time on the Real Estate License Exam Prep Podcast!
Think of a net listing like a fishing net where the agent keeps only the fish that jump above a certain height, leaving smaller ones for the seller.
Visualize this image when encountering listing questions - if you see the agent keeping only what's 'above the net,' it's likely prohibited.
When encountering listing questions, immediately flag any option mentioning 'net' as potentially prohibited. Remember: net listings = illegal in Tennessee.
Real World Application
How this concept applies in actual real estate practice
Imagine a Tennessee homeowner, Mrs. Johnson, lists her property with an agent using what appears to be a standard 6% commission agreement. However, the agent has secretly structured it as a net listing, telling Mrs. Johnson she'll receive $200,000 net. When the property sells for $210,000, the agent claims the entire $10,000 difference as commission. Mrs. Johnson is shocked to receive less than expected. She later discovers this arrangement violates Tennessee law and files a complaint with the Tennessee Real Estate Commission, resulting in disciplinary action against the agent.
Continue Learning
Explore this topic in different formats
More Practice of Real Estate Episodes
Continue learning with related audio lessons
What is the max civil penalty per violation in Minnesota?
2:52 • 0 plays
If an auditor visits a broker's office in Ohio, how many years of records are required?
2:47 • 0 plays
Is commingling legal in Mississippi?
2:50 • 0 plays
Utah license law has three levels of licensure. What are they?
2:03 • 0 plays
Georgia has real estate license reciprocity agreements with which states?
2:44 • 0 plays
Ready to Ace Your Real Estate Exam?
Access 2,499+ free podcast episodes covering all 11 exam topics.