How is a net listing defined?

A net listing is defined as a situation where the seller specifies the amount of money they want to receive from the sale of the property, and any amount above that specified figure is kept by the broker as their commission. This type of listing can often lead to disputes regarding the proper valuation of the property, as it encourages brokers to sell the property for as much as possible above the seller's net desired amount.

The structure of a net listing shifts the focus from the commission being a percentage of the sale price to the broker's earnings being directly tied to the amount they can achieve above the seller's minimum price. This can motivate brokers to work harder for a higher sales price, as it maximizes their potential commission while ensuring the seller gets their desired net amount.

In contrast to other listing agreements, where the broker's commission is predetermined as a percentage of the final sale price, a net listing allows for more flexibility in the selling process. It’s important to note that net listings are not commonly used or are even illegal in some states due to potential conflicts of interest and ethical concerns, but they do illustrate a specific way of compensating a broker based on the transaction's outcome.