What States are Net Listings Legal 2022

What States Are Net Listings Legal?

Alabama - Illegal or banned Alaska - Illegal or banned Arizona - Illegal or banned Arkansas - Illegal or banned California - Legal, but can only be used with highly sophisticated clients or independently represented Colorado - Illegal or banned Connecticut - Illegal or banned Delaware - Illegal or banned Florida - Legal or banned Georgia - Illegal or banned Hawaii - Illegal or banned Idaho - Illegal or banned Illinois - Illegal or banned Indiana - Illegal or banned Iowa - Illegal or banned Kansas - Illegal or banned Kentucky - Illegal or banned Louisiana - Illegal or banned Maine - Illegal or banned Maryland - Illegal or banned Massachusetts - Illegal or banned Michigan - Illegal or banned Minnesota - Illegal or banned Mississippi - Illegal or banned Missouri - Illegal or banned Montana - Illegal or banned Nebraska - Illegal or banned Nevada - Illegal or banned New Hampshire - Illegal or banned New Jersey - Illegal or banned New Mexico - Illegal or banned New York - Illegal or banned North Carolina - Illegal or banned North Dakota - Illegal or banned Ohio - Illegal or banned Oklahoma - Illegal or banned Oregon - Illegal or banned Pennsylvania - Illegal or banned Rhode Island - Illegal or banned South Carolina - Illegal or banned South Dakota - Illegal or banned Tennessee - Illegal or banned Texas - Legal, but stipulates that a net agreement holds the agent in a position of power, so it can be done only if the seller is extremely familiar with the market pricing Utah - Illegal or banned Vermont - Illegal or banned Virginia - Illegal or banned Washington - Illegal or banned West Virginia - Illegal or banned Wisconsin - Illegal or banned Wyoming - Illegal or banned

What is a Net Listing?

Net listings are an older form of contract that is only used in rare circumstances. They are illegal in some states and the National Association of Realtors further forbids them in the majority of the states and even in circumstances. A net listing circumvents the traditional way that agents are compensated by absolving them of a percentage gained from the sale of a home, but rather receiving a lump sum over a net amount.

How this works: A seller enters into a net listing agreement with the agent. The seller agrees to receive 400,000 in exchange for the sale of the home. The realtor would then go and find a buyer for much above that price, say 600,000. Instead of receiving a commission of say, 2.5% on the sale of 600,000 (15,000) - the realtor would keep the difference between 600,000 and 400,000 (200,000). With this example, it is evident that a realtor could take advantage of an unsophisticated seller if they are unaware of the market value of housing for their comparables. A realtor has a higher fiduciary duty to clients who are less educated in these situations.

What States are Net Listings Legal 2022