Types of Listing Agreements - Net Listing

By
Real Estate Agent with Bayou Properties Realty

Types of Listing Agreements

There are 4 types of listings in Texas... Open Listings, Exclusive Agency, Exclusive Right to Sell, and Net Listings.

Net Listings - The Rules of the Texas Real Estate Commission states the following regarding net listings: A “net listing” is a listing agreement in which the broker’s commission is the difference (“net”) between the sales proceeds and an amount desired by the owner of the real property. A broker may not take net listings unless the principal requires a net listing and the principal appears to be familiar with current market values of real property. When a broker accepts a listing, the broker enters into a fiduciary relationship with the principal, whereby the broker is obligated to make diligent efforts to obtain the best price possible for the principal. The sum of a net listing places an upper limit on the principal’s expectancy and places the broker’s interest above the principal’s interest with reference to obtaining the best possible price. If a net listing is used, a broker should modify the listing agreement so as to assure the principal of not less than the principal’s desired price and to limit the broker to a specified maximum commission (§535.16. Listings).

A net listing can be issued in conjunction with an open listing, an exclusive agency listing or an exclusive right-to-sell listing. With this type of agreement, the seller sets a minimum net price. The licensee obtains as commission any amount over the net price.

It would seem that it would be hard to prove that the original suggested list price was an accurate market value and that you are acting in that clients best interests if you make a killing on a net listing.  I gather that this type of listing is much more prevalent in the commercial real estate world.  Nobody that I know of uses these in my area for residential real estate... or maybe they just aren't telling me they are!! ha ha

Has anyone used a Net Listing?  Share your experience with issues that arise... and what you did to overcome them.

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Topic:
Real Estate Sales and Marketing
Tags:
net listing

Comments 3 New Comment

Rainmaker
863,126
Michael Setunsky
Your Commercial Real Estate Link to Northern VA
Michael's Commercial LLC

Brian, this is interesting. I thought Net Listings were illegal everywhere. They are illegal in my State of Virginia. I'd be interested to hear what agents from other States have to say. Thanks.

February 12, 2009 09:01 AM
Ambassador
2,273,561
Lenn Harley
Real Estate Broker - Virginia & Maryland
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate

Mmmmm.   I seem to recall that "net listings" are not legal in MD or VA. 

February 12, 2009 09:08 AM
Anonymous #3
Anonymous
Andrew

Net Listing Agreements are illegal see Section 17-322(b)(11) of the Business Occupations and Professions of the MD Annotated code

June 10, 2011 11:09 AM
Rainmaker
178,702

League City, TX - Worrell Team, REALTORS, GRI, CNE

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Author Bio: Brian Worrell, leader of the Worrell Team, is a Realtor specializing in League City, Clear Lake and surrounding areas in the SE Houston Metro area, also known as the Houston Bay Area. Brian grew up in the Houston area and received a BBA in Marketing from the University of Houston. He and his team strive to provide their clients high-end service in order to gain advantages through unique marketing techniques that have proven effective: cutting edge technology, search-engine optimized web marketing, formal negotiation training, commercial and economic understanding of their clients’ best interests, professional photography, access to legal counsel, as well as other services and techniques that are unique in the industry.

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