What is a "net listing"?

A net listing is defined as a type of listing agreement where the seller establishes a specific minimum price they will accept for their property, and any amount that is generated above that minimum price becomes the broker's commission. This arrangement incentivizes the broker to sell the property for as much as possible, as their earnings depend on the difference between the sale price and the set minimum.

This type of listing is notable because it shifts the risk of the sale price to the broker, who must market and sell the property at or above the agreed minimum to benefit. It is important to understand that net listings can pose ethical and legal challenges; some jurisdictions do not allow them due to potential conflicts of interest, as they may encourage brokers to prioritize higher commissions over the best interests of the seller.

In contrast, the other choices describe different listing types or agreements that do not align with the specific definition of a net listing. The second option implies guaranteed profits, which is not a characteristic of net listings. The third option describes a listing with an automatic renewal feature, and the fourth option outlines restrictions on dealings with other brokers, both of which diverge from the concept of a net listing.