DRE & LicensingIntermediateCalifornia Exam
Which of the following best describes 'net listing' agreements in California?
AThey are the most common form of listing agreement, under California Department of Real Estate requirements
BThey are legal and encouraged by the DRE, per standard DRE licensing procedure
CThey are legal but discouraged by the DRE as they may create a conflict of interestCorrect
DThey are illegal under California law, as required for license renewal in California
Why They are legal but discouraged by the DRE as they may create a conflict of interest Is Correct
Answer C: They are legal but discouraged by the DRE as they may create a conflict of interest
Net listings (where the broker keeps anything above a seller's specified net price as commission) are legal in California but strongly discouraged by the DRE because they create a conflict of interest between the broker and the client.
Key DRE & Licensing Terms in This Question
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Key Terms to Know
Listing Agreement
A contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
LienA financial claim against a property that serves as security for a debt or obligation, giving the creditor the right to foreclose if unpaid.
Fiduciary DutyThe highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.
Option ContractA contract giving the buyer the right, but not the obligation, to purchase a property at a specified price within a specified time period.
Math Concepts
State-Specific Concepts
DRE Regulation
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