A California broker holds a net listing on a property where the seller's stated net is $750,000. After full marketing, the highest offer obtained is $740,000 and the seller wishes to accept it. Under California law, what is the correct outcome regarding the broker's commission?
Correct Answer
A) The broker earns no commission because the sale price does not exceed the seller's net amount, but the seller may still choose to accept the offer
In a net listing, the broker's commission equals the amount by which the final sale price exceeds the seller's stated net. Because the offer of $740,000 is below the seller's net of $750,000, there is no surplus and the broker earns no commission. However, the net listing does not restrict the seller's right to accept any offer — the seller may proceed with the sale and receive $740,000 minus applicable closing costs. The broker simply goes uncompensated.
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Related Topics & Key Terms
Key Terms:
Related Concepts
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
The legal principle that holds a broker responsible for the actions of their agents and employees performed within the scope of the agency relationship.
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
More Laws Of Agency Fiduciary Duties Questions
A property sold for $450,000. The commission rate was 6%. If the listing broker received 60% of the total commission, how much did the listing broker receive?
An individual who is not employed by the client, but has been delegated agency duties by an agent of the client, is referred to as a(n):
What are the three steps of the agency disclosure in proper chronological order?
An agent needs to disclose a conflict of interest to the affected parties when a principal or service provider in the transaction is the agent’s:
A broker who simultaneously represents the best interests of both opposing parties in a transaction is known as a(n):
- → When showing a listed residential property of one to four dwelling units to potential buyers, the listing broker is required to disclose:
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- → A real estate broker is subject to disciplinary action from the Department of Real Estate (DRE) if they:
- → The seller states they will accept the buyer’s offer if the broker lowers their 6% commission by 25%. If the broker accepts, they will receive:
- → When a broker wants to store documents electronically, the storage method may not allow the final documents to be altered. What method of electronic document storage is required by the Department of Real Estate (DRE)?
- → A broker receives a full price offer on a house they are listing. Before they present the offer to the seller, another broker brings in an all cash offer for $5,000 less. The listing broker is to:
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- → If a 16-year-old emancipated minor wishes to sell real property, their broker may:
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