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How a Net Listing Works in Real Estate

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.

Legal and Tax Disclaimer

Please be advised that the content presented in this blog is for informational purposes only and should not be construed as legal or tax advice. The articles and information provided here are written from the perspective of a real estate agent affiliated with Keller Williams, and do not represent legal or tax counsel.

As the author, I am a licensed real estate professional under Keller Williams, holding Brokerage DRE License Number: #02197031. However, it is important to note that my expertise is in the field of real estate, and not in legal or tax matters. The insights and opinions shared on this blog are based on my experiences and knowledge in the real estate industry and should be treated as general guidance rather than definitive legal or tax advice.

For specific legal or tax concerns relating to any real estate transactions or investments, readers are strongly encouraged to consult with a qualified attorney or tax advisor who can provide tailored advice based on your individual circumstances and the latest legal and regulatory requirements.

The information on this blog is provided "as is" without warranty of any kind, and I, along with Keller Williams and its affiliates, disclaim all liability for any loss, damage, or misunderstanding arising from reliance on the information contained herein.

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