Which type of listing is prohibited in some states?

Prepare for the 75-Hour Broker Pre-License Exam. Ace this important test with our comprehensive flashcards and multiple choice questions. Gain confidence in topics such as real estate practices and laws!

Net listings are prohibited in some states due to concerns over unethical practices and potential conflicts of interest they may create. In a net listing, the seller specifies a minimum amount they wish to receive from the sale of their property. Any amount above that minimum becomes the commission for the broker. This can lead to situations where the broker might prioritize their commission over the seller’s best interest, possibly leading to undervaluing or neglecting the true market value of the property.

Regulations in various states have emerged to protect consumers and ensure fair practices in real estate transactions, which is why net listings are either restricted or banned altogether. Some states view them as too open to exploitation. This regulation helps maintain a standard of professionalism and integrity in real estate services.

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