Why is a net listing considered risky and restricted or prohibited in many jurisdictions?
Correct Answer
A) Because it creates a conflict of interest where the broker's compensation increases as the seller receives less relative value
A net listing creates a built-in conflict because the broker keeps everything above the seller's net amount, giving the broker an incentive to push for the highest price without the seller fully understanding the broker's take.
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Related Topics & Key Terms
Key Terms:
Related Concepts
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.
An agency relationship created when a principal approves or accepts an agent's previously unauthorized actions, effectively granting authority after the fact.
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A listing agreement creates an agency relationship between:
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