A homeowner tells a broker she needs $180,000 from the sale of her home and authorizes him to sell at any price he can negotiate. The broker, who knows the market supports about $220,000, lists at that figure, finds a buyer, and at closing keeps the $40,000 above the seller's figure as his entire compensation. Which type of listing did the broker use?
Correct Answer
D) Net listing
A net listing pays the brokerage whatever the sale brings above the seller's stated bottom line, so the broker's fee grows as the seller's understanding of value shrinks. That built-in conflict is why several states prohibit net listings outright and others permit them only with full written disclosure of market value. The other three structures describe how many brokerages are engaged and who may earn a commission, not how the fee is computed.
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Related Topics & Key Terms
Key Terms:
Related Concepts
The extent of power and actions an agent is authorized to perform on behalf of the principal, as defined by the agency agreement.
The fiduciary obligations owed by a listing agent to the seller, including marketing the property, presenting all offers, and protecting the seller's confidential information.
A practice where the agent or brokerage represents only one party in a transaction — either the buyer or the seller, but never both.
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