Types of Listing Agreements
There are 4 types of listings in Texas... Open Listings, Exclusive Agency, Exclusive Right to Sell, and Net Listings.
Net Listings - The Rules of the Texas Real Estate Commission states the following regarding net listings: A “net listing” is a listing agreement in which the broker’s commission is the difference (“net”) between the sales proceeds and an amount desired by the owner of the real property. A broker may not take net listings unless the principal requires a net listing and the principal appears to be familiar with current market values of real property. When a broker accepts a listing, the broker enters into a fiduciary relationship with the principal, whereby the broker is obligated to make diligent efforts to obtain the best price possible for the principal. The sum of a net listing places an upper limit on the principal’s expectancy and places the broker’s interest above the principal’s interest with reference to obtaining the best possible price. If a net listing is used, a broker should modify the listing agreement so as to assure the principal of not less than the principal’s desired price and to limit the broker to a specified maximum commission (§535.16. Listings).
A net listing can be issued in conjunction with an open listing, an exclusive agency listing or an exclusive right-to-sell listing. With this type of agreement, the seller sets a minimum net price. The licensee obtains as commission any amount over the net price.
It would seem that it would be hard to prove that the original suggested list price was an accurate market value and that you are acting in that clients best interests if you make a killing on a net listing. I gather that this type of listing is much more prevalent in the commercial real estate world. Nobody that I know of uses these in my area for residential real estate... or maybe they just aren't telling me they are!! ha ha
Has anyone used a Net Listing? Share your experience with issues that arise... and what you did to overcome them.