Massachusetts Real Estate License Practice Test

What characterizes a net listing in real estate?

1. The seller keeps all proceeds after expenses

2. A commission-based listing for brokers only

3. A formal agreement with one real estate agent

4. A listing that requires multiple broker involvement

The correct answer is: The seller keeps all proceeds after expenses

A net listing in real estate is characterized by the seller keeping all proceeds after expenses. In a net listing arrangement, the seller specifies a certain amount of money they want to receive from the sale of their property. The real estate agent's commission is then based on any amount received that exceeds the specified net amount. This means that the agent's payment comes from the excess above the seller's predetermined price, which incentivizes the agent to sell the property for the highest possible price. The focus of a net listing is on the net proceeds to the seller, which fundamentally distinguishes it from other listing types where the commission is a percentage of the sale price without consideration for the seller's desired net gain. This can streamline motivations for the agent and seller but also raises concerns about transparency and valuation, which can complicate the selling process. The other options do not accurately capture the essence of a net listing. A commission-based listing for brokers only may imply a traditional commission structure without the unique net pricing characteristic. A formal agreement with one real estate agent suggests an exclusivity that might not apply to net listings. Lastly, a listing that requires multiple broker involvement contradicts the intention of a net listing, which typically focuses on a single broker's performance related to the seller