Question

Under a brokerage agreement with a property owner, the broker is entitled to sell the property for any price, as long as the seller receives $85,000. The broker may keep any amount over $85,000 as a commission. This type of listing might be illegal and is called

A. an exclusive right-to-sell listing
B. an exclusive agency listing
C. an open listing
D. a net listing

Answer 1

A net listing allows a broker to keep the amount over a specified net price as a commission, which can lead to a conflict of interest and is often considered unethical or illegal.

Step-by-step explanation:

The type of listing described in the student's question is known as a net listing. This kind of brokerage agreement allows the real estate broker to keep any amount over a specified net price to the seller as a commission. In this case, if the property owner needs to receive $85,000 and the broker sells the property for more than that amount, the excess over $85,000 is the broker's commission. However, it's important to note that net listings can often be considered unethical or illegal because they can create a conflict of interest and do not always ensure the best sale price for the seller. This type of agreement can potentially incentivize a broker to focus on maximizing their commission rather than the seller's profit.