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Real Estate Exam
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The correct answer is B. A net listing is an agreement under which the seller sets the net amount the seller will receive, and the broker keeps any sale proceeds above that amount as compensation. The facts state that the seller will receive a set net amount and the broker will keep the excess, which is exactly a net listing. §175.19 of New York 19 NYCRR Part 175 prohibits a broker from entering into this type of net listing agreement. This arrangement creates a risk that the broker’s compensation will increase with a higher sale price, potentially undermining the broker’s fiduciary duty to the seller and the seller’s confidence in fair price negotiations. Choice A, an exclusive-agency listing, addresses the commission when the owner finds a buyer directly. It does not involve the broker keeping the amount above a net figure set for the seller. Choice C, an open listing, is a nonexclusive arrangement with multiple brokers. Choice D, an exclusive right-to-sell listing, is an agreement centered on a commission as agreed. None of these is a net listing, which combines a fixed net amount for the seller with the broker’s retention of any excess.

Exam tip
When you see “seller gets net, broker gets the rest,” immediately think net listing. Exams often present it alongside exclusive right-to-sell, exclusive-agency, and open listings. With an exclusive right-to-sell listing, the agreed commission is at issue regardless of who finds the buyer. With an exclusive-agency listing, the key issue is whether the owner finds the buyer directly. With an open listing, multiple brokers may compete. In New York, the prohibition on net listings takes priority over the general principle of freedom of contract. The existence of a contract or an agency disclosure form does not make a prohibited net listing valid.