Net Listing in Real Estate: Definition, Legal States & Risks

In the world of real estate, there are various types of listing agreements between sellers and their agents. One less common, and somewhat controversial type, is the net listing. Understanding what a net listing is and how it works can help you decide if it's the right choice for your real estate transaction.

Definition of a Net Listing

A net listing is a special kind of deal in real estate where the person selling the house decides on the lowest amount of money they want to get from the sale. This amount is called the "net price." If the house sells for more than this net price, the extra money is what the real estate agent gets paid. So, the more money the agent can sell the house for above the net price, the more money they make. It's like a game where the agent's goal is to sell the house for as much as possible to earn a bigger reward.

How Does a Net Listing Work?

Imagine a homeowner decides to go for a net listing when selling their house. They set the net price at $300,000, which is the minimum amount they want to end up with after the sale. In this agreement, the real estate agent's pay is based on how much they can sell the house for above that net price.

For example, if the agent finds a buyer willing to pay $350,000 for the house, the agent would earn a commission of $50,000. This is because the selling price is $50,000 more than the net price, and in a net listing, that extra amount is the agent's commission.

On the other hand, if the agent can only sell the house for the net price of $300,000, they wouldn't get any commission at all. This is because there's no excess over the net price. So, in this scenario, the agent's motivation to sell the house for more than the net price is very high, as their earnings depend on it.

Pros and Cons of Net Listings

Pros:

• Motivation for the Agent: Since the agent's commission is based on the selling price above the net price, they may be more motivated to get the highest possible price for the property.
• Flexibility for the Seller: Sellers can set their desired net price, ensuring they receive a minimum amount from the sale.

Cons:

• Conflict-of-interest risk: Because the agent pockets every dollar above the seller’s net price, their financial incentive can clash with their fiduciary duty.
• Marketability limits: Pricing the home well above market to secure a big spread shrinks the buyer pool and can stall the sale.
• Legality: Net listings are illegal in 47 states and D.C.; only California, Texas, and Florida still permit them—and even there, regulators warn they should be used only with sophisticated sellers and full written disclosure.
• MLS exclusion: NAR MLS Policy 7.61 bars net listings from being entered into any MLS, so they receive far less exposure.
• Limited REALTOR® participation: NAR’s Policy 7.61 forbids net listings from entering any REALTOR®-operated MLS, and because 88 % of U.S. home sellers list through the MLS, about 1.28 million of NAR’s 1.45 million members—roughly nine out of ten REALTORS®—can’t (and therefore don’t) handle net-listing agreements.

States Where Net Listings Are Allowed in Real Estate

Net listings are not allowed in many states due to the potential for conflicts of interest and ethical concerns. However, there are a few states where net listings are still legal. As of the writing of this blog, these states include:

• Texas - Legal; 22 TAC § 535.16 allows only if the seller is “familiar with current market values.
• California - Legal; brokers must confirm the seller is “particularly sophisticated” or already represented (CA DRE advisory)
• Florida - Legal; no extra statutory condition, but fiduciary duties still apply.
• All other 47 states plus D.C. – Illegal.

Is a Net Listing Right for You?

Before considering a net listing, it's important to weigh the potential benefits against the risks. Consult with a real estate professional or legal advisor to understand the implications and ensure that your interests are protected. While net listings can offer advantages in certain situations, they're not suitable for every seller or every market.

2025 Market Factors Affecting Net Listings‍

The pending NAR antitrust settlement is driving new rules on buyer-agent compensation and listing transparency.

• Beginning August 2025, Zillow will hide any listing not sourced from an MLS feed, further shrinking exposure for net listings.

• Off-MLS marketing now carries greater regulatory scrutiny, especially in states that already discourage pocket listings.

FAQS ABOUT NET LISTINGS (UPDATED 2025)

Are net listings legal in New York?‍

No. New York Real Property Law § 442-d bans them.

Why won’t my agent put a net listing on the MLS?

NAR Policy 7.61 forbids MLS submission of all net listings nationwide.

Can a REALTOR® in Texas still handle a net listing off-MLS?‍

Yes, but only if the seller understands market value and signs explicit disclosures.

How does a broker’s fiduciary duty apply?

The broker must still seek the highest possible price; ignoring that duty can violate REALTOR® Code of Ethics Standard of Practice 1-1.

Will a net listing save me commission?

Not necessarily—off-MLS properties reach fewer buyers, often leading to discounted offers.

Does Zillow display net listings?

No. Starting August 2025 Zillow will show only MLS-fed listings.

Is there a cap on how much the broker can earn?

Some agreements, particularly in Texas, include a “maximum broker compensation” clause to limit excessive spreads.

Final Thoughts on Net Listings

Net listings in real estate are a unique arrangement that can offer advantages, but also come with significant risks. Understanding the dynamics of this type of listing can help you make an informed decision about how to sell your property. Always seek professional advice to ensure that your real estate transaction aligns with your goals and complies with local regulations.

Want to make studying for the real estate exam? Join our real estate crash course and exam prep program.

When you join, you get 8+ hours of video content designed to teach you the concepts, vocabulary, historical events, and laws you’ll see on the national real estate exam.

Our exam prep package comes with unlimited practice exams, vocabulary flashcards, an eBook study guide, thousands of question and answer videos, and video explainers.

Get both program together or individually. You can access the real estate crash course videos and prep package using the US Realty Training app.

To join the program, click the button below. Let’s make studying easy!