In the world of real estate, there are different types of agreements between owners and agents. One of these agreements is known as “net listing.” It is crucial to understand how it works in order to properly navigate real estate transactions.

What is a Net Listing?

Net Listing: It is a type of agreement where the owner decides a specific net price that he expects to receive for his property. Anything over that agreed upon amount becomes the agent's commission.

A Practical Example

Suppose an owner and an agent agree to a “net listing” with a listing price of $220,000. If the house sells for $230,000, the difference between the sale price and the agreed net price is $10,000. In this case, the agent “will earn a $10,000 commission” (you will earn a commission of $10,000).

Important considerations

Although net listings may seem attractive to some sellers, it is essential to note that not all states allow this type of arrangement due to potential conflicts of interest. It is vital to be informed and work with an agent who has a deep understanding of local regulations.

Conclusion

“Net listings” are another option in the real estate market. However, both owners and agents should be aware of the implications and regulations surrounding them. In the example given, the agent benefits from your effort by selling the property above the agreed upon net price, earning an additional commission.