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What best describes a net listing?

  1. The seller pays the broker a flat fee regardless of sale price

  2. The seller specifies a desired price and pays the broker any amount above this

  3. The broker sets the selling price on behalf of the seller

  4. The seller agrees to a percentage commission on the final sale price

The correct answer is: The seller specifies a desired price and pays the broker any amount above this

A net listing is characterized by a situation where the seller establishes a specific amount they wish to receive from the sale of their property. Any proceeds above this predetermined amount are then paid to the broker as their commission. This arrangement can incentivize brokers to maximize the selling price since their compensation increases with a higher final sale price. Understanding this type of listing is crucial for real estate professionals because it differs significantly from standard commission structures, where the broker's fee is a set percentage of the sale price. It highlights the necessity for clear communication and agreement between the seller and the broker regarding expectations and potential earnings from the sale.