What is a Net Listing in Real Estate?

Lesson Transcript
Instructor: Tisha Collins Batis

Tisha is a licensed real estate agent in Texas. She holds bachelor's in legal studies and a master's degree in criminal justice.

In this lesson, we'll define, and provide examples of a 'net listing' in real estate. Additionally, we'll compare this type of listing with other types. Updated: 04/13/2020

Definition of Net Listing

Imagine being a real estate agent, helping people buy new homes and sell their old ones. You get to make dreams come true every day. If you're lucky, business will be booming and you will make stacks of money. However, that's not always the case, and it can be frustrating when income is inconsistent. Additionally, you may have to pay the broker a percentage of your commission, further dwindling your income.

The type of listing an agent is selling determines the amount of money they will make from the sale. A net listing allows the agent to keep any amount of money over the price set by the seller at the conclusion of the sale. In other words, if the house sells for more than the seller's asking price, the agent can keep or 'net' the difference.

It's important to note that net listings are illegal in many states. While they are legal in California and Texas, both of these states have rules in place to protect sellers and to avoid complications and potential lawsuits.

Why would a client allow their home to be listed as a net listing? The client may want to sell his house quickly, if for example, he's already found a new house and wants to act fast. A net listing could give the agent the incentive to get the house under contract quickly at a great sales price as, the higher the sale, the more the agent will profit. Unlike other kinds of listings in which the agent retains a pre-set percentage as commission, a net listing may be an opportunity to make more money.

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  • 0:04 Definition of Net Listing
  • 1:35 Example of Net Listing
  • 2:24 Other Types of Listings
  • 3:24 Comparisons
  • 4:11 Lesson Summary
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Example of Net Listing

Chrissy and David are relocating from Texas to Georgia due to David's job. They purchased their home in Texas just two years ago and now need to sell and make the move east. They have looked into the housing market in Georgia and decided that their budget for a new home there will be $150,000.

David is a veteran, so they won't have to pay a down payment, but they will have to pay any closing costs above what the seller agrees to pay, which their lender told them will be about $6,000. They have $25,000 in equity in their current house in Texas, and they want to sell quickly. After talking to a listing agent, they agree to a net listing, with the understanding that, as long as they net $6,000 in the sale to cover those closing costs, the agent can have the rest.

Other Types of Listings

There are other types of listings available to sellers; each has its own benefits to fit individual needs. Three other types of listings are:

Exclusive Right to Sell Listing - This is a type of listing that is beneficial to real estate agents. The real estate agent who lists the property will get paid no matter who ultimately makes the sale; another agent, or even the seller, can bring a buyer. The listing agent will still make a commission, and the seller will be able to move on to another home.

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