What is a net listing in real estate?

A net listing is a specific type of real estate listing agreement in which the seller sets a minimum acceptable price for their property, often referred to as the "net" amount they wish to receive from the sale. The real estate broker is then entitled to keep any proceeds from the sale that exceed this predetermined amount. This means that if the property sells for more than the seller's net amount, the broker earns the difference as a commission.

This arrangement can incentivize brokers to sell the property at a higher price since their compensation is tied directly to the excess above the seller's desired amount. However, net listings can also raise ethical concerns regarding the potential for a broker to prioritize their commission over the seller's best interests, as brokers might focus on achieving higher sales prices to benefit themselves.

In contrast to this, other options—like the notion that the listing is free for the seller, the existence of standard commission rates, or payment contingent solely upon the sale—do not accurately define a net listing but instead describe different types of listing agreements or financial arrangements in real estate.