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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Rainmaker
893,958
Michael Setunsky
Michael's Commercial LLC - Woodbridge, VA
Your Commercial Real Estate Link to Northern VA

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.

Feb 12, 2009 09:01 AM #1
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Lenn Harley
Lenn Harley, Homefinders.com, MD & VA Homes and Real Estate - Leesburg, VA
Real Estate Broker - Virginia & Maryland

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

Feb 12, 2009 09:08 AM #2
Anonymous
Anonymous
Andrew

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

Jun 10, 2011 11:09 AM #3
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Rainmaker
188,757

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

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