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

BLegal only with written disclosure

CIllegal in CaliforniaCorrect

DLegal only for commercial properties

Why Illegal in California Is Correct

Answer C: Illegal in California

Net listings are illegal in California. They create a conflict of interest because 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.

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.

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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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Agency Law Guide

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