Net Listing In Real Estate – Is It Legal And Should You Risk Trying It?

Net Listing In Real Estate – Is It Legal And Should You Risk Trying It?

April 24, 2023

Produced by:
Carmel Woodman

With over 8 years of expertise, Carmel brings a wealth of knowledge as the former Content Manager at a prominent online real estate platform. As a seasoned ghostwriter, she has crafted multiple in-depth Property Guides, exploring topics such as real estate acquisition and financing. Her portfolio boasts 200+ articles covering diverse real estate subjects, ranging from blockchain to market trends and investment strategies.

The Short Answer

A net listing is a type of real estate listing agreement where the seller specifies a minimum price they would like to receive from the sale, and any amount over that price is considered the real estate agent’s commission. In other words, the agent’s commission is based on the amount the property sells for, above the seller’s minimum price, creating a potential conflict of interest.

Net listing agreements are generally considered controversial and even illegal in some states, as it can lead to the agent pressuring the buyer to pay a higher price in order to increase their own commission. In most states, net listings are strictly regulated and require additional documentation and disclosures to protect both the seller and the agent.

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What Is A Net Listing In Real Estate?

A net listing is an uncommon type of agreement in real estate, and it requires both the seller and the real estate agent to agree. A net listing is a real estate listing where the owner of the property sets a particular amount that they would like to receive from the sale of their home.

The real estate agent that has listed the property will not receive a commission on the sale, instead, if they can sell the property for more than the specified amount, they will be paid the difference. The problem with net listings is that the seller is in a position where they can be taken advantage of, by the broker. So, in some areas net listings are illegal.

Home for sale

Net Listing Agreement Examples

As an example of how a new listing would work in real estate, let’s say that a homeowner wants to sell their property for $300,000. They’re also willing to accept more, if they receive a higher offer. The homeowner will hire a real estate agent who agrees to take on the net listing. Which means that they will be paid anything they can sell the property for, which is over the specified amount.

In other words, if the real estate agent can sell the home for $350,000, they will be paid $50,000 for their efforts and the homeowner receives their $300,000. However, if the agent only manages to sell the home for $305,000, then they will only receive $5,000.

Are Net Listings Legal In The US?

The problem with net listings is that they can create a major conflict of interests between the real estate professionals and sellers. Net listings create the potential for real estate agents to price the home higher, for their own personal gain and sell it for a higher price to maximize their own profits, instead of doing what’s best for their client (the seller).

In other words, the agent may be tempted to pressure the buyer to pay a higher price in order to increase their own commission, even if it is not in the best interest of the seller.

At best, net listings legal capacity is restricted, and at worst they’re simply illegal. As such, most states do not allow net listings in real estate, with the exception of California, Texas and Florida. These states do allow net listings, however there are regulations around how they work.

Real estate listing


In Texas, net listings legal regulations state that the “broker may not enter into a net listing agreement unless the principal requires a net listing and the principal is clearly familiar with the current market values of real property.” Listing agents in Texas need to follow this policy when they’re entering into a net listing agreement.  


In California, net listings are legal however the following policy needs to be adhered to: “[Net listings] can easily lead to a breach of the agent’s fiduciary obligations and should be used only with highly sophisticated clients, or clients who are independently represented and, of course, with full disclosure of all of the conflicts involved.”


In Florida, net listings are also legal, however they may only be entered into as a binding agreement with a qualified Florida real estate attorney representing the seller’s best interests.

Reasons To Avoid Net Listings Altogether

As mentioned above, sellers can be taken advantage of, with this type of real estate transaction. Net listing agreements create a situation where the real estate professionals may be incentivized to push for a higher sale price in order to increase their own commission, rather than acting in the best interest of their client. This creates a potential conflict of interest that can lead to ethical concerns and legal issues.

For example, if a homeowner doesn’t know the actual value of their home, and a real estate agent tells them it is $350,000. Knowing full well that the value is higher, the real estate agent then sells the home for $420,000 and pockets $70,000 from the net listing agreement. If exclusive agency listings are used, this increases the chances of a seller being taken advantage of.

There is a lack of transparency when it comes to net listings, and this can lead to the seller not fully understanding the financial implications of net listing agreements. While the seller sets the price, they may be doing so without fully understanding how much their property is worth, and this can lead to disputes later on.

Property listing

Legal Alternatives To Net Listing In Real Estate

Now that we’ve established that net listing agreements may not be the best solution for sellers, let’s take a look at some of the most common legal alternatives.


  • Exclusive Right-to-Sell Listing Agreement: Exclusive Right-to-Sell listings are the most common type of listing agreement. In this agreement, the seller pays the real estate agent a commission, regardless of who finds the buyer. As such, right-to-sell listings allow for a quicker sale.
  • Multiple Listing Service (MLS) Agreement: An MLS agreement involves a property being listed on the MLS and the commission being paid to the real estate agent that brings a buyer who purchases the property. Listing agents use the MLS to list houses that are for sale, and this is a popular place for homes to be listed.
  • Exclusive Agency Listing Agreement: With this type of agreement, the seller retains the right to sell the property themselves but agrees to pay the real estate agent a commission if they find a buyer.
  • Open Listing Agreement: With this type of agreement, the seller can use multiple real estate agents to sell their home. The agent who brings the buyer that purchases the home is the agent who will receive commission.

These listing agreements provide sellers with a safer way to sell their home, with clear guidelines and transparent processes. Both real estate agents and sellers are protected, and there is no room for a conflict of interests, or for anyone to be taken advantage of. As such, these options are typically more attractive to home sellers than net listings.

Each alternative has its pros and cons, so it’s important to learn about how each agreement works, and what the benefits and pitfalls are. This will allow sellers to make informed decisions about their listing and get the best possible price in the real estate transaction.

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