DRE & Licensing
Under California law, a 'net listing' arrangement where the broker keeps everything above a specified net price to the seller is:
APerfectly legal and commonly used
BLegal only for commercial properties
CLegal but strongly discouraged by the DRE, and the broker must disclose the profit made✓ Correct
DIllegal and grounds for license revocation
Explanation
Net listings are legal in California but are strongly disfavored by the DRE because of the inherent conflict of interest — the broker benefits directly from a higher sale price at the seller's expense. A broker using a net listing must disclose the purchase price and the profit they earned to the seller. Failure to disclose is grounds for license discipline.
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