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A net listing refers to a particular type of agreement between home sellers and real estate agents whereby the seller demands a specific price and all proceeds in excess of this price will be given to the agent as commissions.
Such agreements inherently have a lot weaknesses for agents to exploit. Especially against uninformed homeowners.
For example, a seller might not be in touch with current market conditions and become a victim of an unscrupulous agent who convinced the owner to set a lower selling price than it’s real market value.
If a good offer comes in, an agent might even flat out refuse to entertain it and don’t inform the seller of the offer as well. This can happen when the offer will only manage to make too little money. So he refuses to sell instead of letting the owner decide for himself.
As such, the practice of net listing is made illegal in various states.
Home seller should note that even though net listings can allow them to ensure a certain amount of sales proceeds, it seldom motivate agents to serve them ethically.
And if the minimum price is set low enough to motivate them, it implies that the sellers are leaving money on the table.