What is a net listing considered in real estate practice?

A net listing is considered a conflict of interest in real estate practice because it often presents potential ethical dilemmas for the agent or broker involved. In a net listing, the seller specifies the amount of money they wish to receive from the sale of their property. Any amount that exceeds this specified net amount is considered the commission for the agent.

This arrangement can create a situation where the agent’s financial interest is not fully aligned with the seller's best interest. For example, the agent may underrepresent the property’s value or discourage offers that meet or exceed the net amount specified by the seller to maximize their commission. This misalignment can lead to a lack of trust and transparency, which can compromise the agent's professional integrity and the overall client experience.

Understanding this framework is crucial for those in real estate, as many jurisdictions, including Massachusetts, may have specific regulations regarding net listings due to the potential for these conflicts.