New Jersey License Law
A New Jersey real estate licensee who engages in 'net listing' agreements is:
AEncouraged to use them for difficult properties
BActing unethically and potentially violating NJ license law because of the inherent conflict of interest✓ Correct
CPermitted to do so only with commercial properties
DRequired to register net listings with the NJREC
Explanation
Net listings—where the broker keeps everything above a set net amount for the seller—are considered unethical and potentially legal but strongly discouraged in NJ because the broker's interest conflicts with the seller's. The broker may be tempted to drive down the seller's expectations to maximize their own compensation.
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Key Terms to Know
Agency
A legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
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.
Seller's Agent (Listing Agent)A real estate licensee who represents the seller's interests, markets the property, and owes fiduciary duties to the seller.
Discount PointsPrepaid interest paid to a lender at closing to reduce the mortgage interest rate, with each point equal to 1% of the loan amount.
State-Specific Concepts
License Law
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