In a net listing, the broker's commission is based on the difference between listing price and sale price.

In a net listing, the broker's commission is based on the difference between listing price and sale price.

• A. False
• B. It is illegal in many states
• C. True
• D. It depends on local practice

Answer: (C)

Net listings tie the broker’s pay to the amount by which the final sale price exceeds the seller’s stated net amount, not to the difference between the listing price and the sale price. In this arrangement, the seller sets a net proceeds target, and the broker earns whatever amount the sale price adds above that net. For example, if the seller wants $200,000 net and the property sells for $260,000, the broker’s compensation would be $60,000, regardless of the listing price. The listing price merely starts the process; it does not determine the commission under a net listing. Because the broker’s interest can diverge from the seller’s net goal, net listings are restricted or illegal in many jurisdictions.

Net listings tie the broker’s pay to the amount by which the final sale price exceeds the seller’s stated net amount, not to the difference between the listing price and the sale price. In this arrangement, the seller sets a net proceeds target, and the broker earns whatever amount the sale price adds above that net. For example, if the seller wants $200,000 net and the property sells for $260,000, the broker’s compensation would be $60,000, regardless of the listing price. The listing price merely starts the process; it does not determine the commission under a net listing. Because the broker’s interest can diverge from the seller’s net goal, net listings are restricted or illegal in many jurisdictions.