AgencyIntermediateCalifornia Exam

When a seller lists a property 'net' — meaning they want a specific amount and the agent keeps everything above that — this arrangement is:

ALegal and encouraged in California, with no special disclosure obligations placed on the broker

BLegal in California, but discouraged by the DRE and requiring disclosure of the agent's profit to the sellerCorrect

CIllegal in California under all circumstances, regardless of disclosure to the seller

DLegal only for commercial properties, and prohibited outright for residential transactions

Why Legal in California, but discouraged by the DRE and requiring disclosure of the agent's profit to the seller Is Correct

Answer B: Legal in California, but discouraged by the DRE and requiring disclosure of the agent's profit to the seller

Net listings are legal in California but strongly discouraged by the DRE because they create a conflict of interest — the agent profits more by obtaining a higher price, which can incentivize the agent to mislead the seller about the property's true market value. Brokers must disclose the amount of their profit to the seller and obtain the seller's consent.

Exam Tip: Agency

Agency questions are among the most tested on the exam. Focus on the difference between client and customer, and memorize the fiduciary duties (OLD CAR). Watch for questions that try to blur the line between a general agent and a special agent.

People Also Study

Key Terms to Know

Fiduciary Duty

The highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.

Agency

A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.

Dual Agency

A situation where a single real estate agent or brokerage represents both the buyer and the seller in the same transaction.

Listing Agreement

A contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.

Math Concepts

Profit & Loss

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