Question 1

What is a net listing agreement in Florida?

Accepted Answer

A net listing is a listing agreement in which the seller specifies a minimum net amount they want to receive from the sale, and the broker’s commission is everything above that amount. Example: the seller specifies a minimum net amount they want to receive, and any sale proceeds above that net figure become the broker’s commission. Net listings are legal in Florida but are strongly discouraged by the Florida Real Estate Commission (FREC) because of the inherent conflict of interest: the broker has an incentive to sell the property for the highest possible price (to maximize their commission), which may conflict with the seller’s interest in a quick sale.

Question 2

What are the risks of net listings in Florida?

Accepted Answer

Risks: conflict of interest (the broker’s commission increases with the sale price, creating an incentive to delay the sale until a higher offer comes in), underpricing (the seller may set the net amount too low, and the broker could earn an excessive commission), lack of transparency (the seller may not understand the broker’s true compensation), and FREC scrutiny (FREC may investigate net listings for violations of the broker’s fiduciary duty, especially if the commission is disproportionate to the service provided). If the broker sells the property for significantly more than the net amount, the broker may face claims of fraud, breach of fiduciary duty, and FREC disciplinary action.

Question 3

Are there alternatives to net listings in Florida?

Accepted Answer

Alternatives: percentage commission (the standard approach: the broker earns a percentage of the sale price, typically 5-6% for residential), flat fee (the broker earns a fixed dollar amount regardless of the sale price), tiered commission (the broker earns a base commission plus a bonus for achieving a sale price above a target), and hourly fee (the broker charges by the hour for specific services). These alternatives provide: clearer compensation structures, reduced conflict of interest, and easier FREC compliance.

Net Listing Agreement

Net Listing Agreements in Florida

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Risks

Alternatives

Related Terms

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