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What Is a Net Listing When Selling a Home?
HomeLight
Real Estate
3 months ago
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If you’re exploring your options for selling a home, you might come across a term that raises some eyebrows: net listing. While it may sound like a straightforward approach, a net listing can come with serious risks for you as the seller.

This guide explains net listing, how it works, and why it’s often discouraged in favor of other, more common listing agreements. We’ll also provide examples so you can better understand why net listing is illegal in most states.

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What is a net listing in real estate?

A net listing is a type of real estate agreement where the seller sets a minimum amount they want to receive from the sale of their home. Any amount above this minimum becomes the agent’s commission.

For example, if you set a net price of $300,000 and your home sells for $350,000, the agent would pocket the additional $50,000 as their fee. While this arrangement might seem appealing for sellers who prioritize simplicity, it can lead to conflicts of interest.

Since the agent’s earnings depend entirely on the sale price exceeding your net, it could incentivize them to prioritize their profit over your best interests.

Net listing agreement examples

Here are a couple of scenarios to illustrate how net listings might play out:

  • Scenario 1: You agree to a net listing with a $200,000 minimum. Your agent finds a buyer willing to pay $275,000. The $75,000 difference becomes the agent’s commission, which far exceeds the typical percentage-based fee.
  • Scenario 2: A seller sets a net price of $400,000. After negotiations, the buyer offers $405,000. The agent walks away with just $5,000 in commission, which may discourage them from putting in extra effort to secure better offers.
  • Scenario 3: You inherit a home in a different state, and an agent tells you they’ll get you at least $500,000 for the property on a net listing agreement. You’re unaware of the home’s value, and the agent sells it for $650,000. The agent walks away with $150,000 compensation on a house that would normally involve a 3% commission of $19,500.

While these examples highlight potential outcomes, they also showcase why net listings can be problematic and why protections exist that either outlaw or restrict them.

Are net listings legal?

Net listings are illegal in most states due to the potential conflicts of interest they create. These agreements can lead to unethical practices.

In real estate, agents have a fiduciary responsibility to act in the best interests of their clients. A net listing undermines this responsibility, as it encourages the agent to focus on maximizing their earnings rather than securing the best deal for the seller.

Additionally, if the agent is also a Realtor — a member of the National Association of Realtors (NAR) — they are prohibited from using net listings under NAR’s Code of Ethics. Net listings are also forbidden on the Multiple Listing Service (MLS), the primary platform for real estate professionals to share and advertise properties.

While net listings are outright illegal in most states, they are subject to strict regulations in others that allow them, such as California, Texas, and Florida. But even in these states where they are allowed, net listings are rarely used due to their controversial nature.


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