Agency
In New York, a 'net listing' is considered unethical primarily because:
AIt requires the broker to guarantee a specific sale price
BIt creates a direct conflict of interest — the broker profits more by obtaining the highest price beyond the seller's minimum, which may lead the broker to withhold lower offers or take advantage of the seller✓ Correct
CIt is illegal under RESPA
DIt requires the broker to pay all transaction costs
Explanation
A net listing creates a direct conflict between the broker's financial interest and the fiduciary duty to act in the seller's best interest. Because the broker keeps all proceeds above the seller's minimum, the broker may be tempted to hold out for a higher price (even if the seller would accept less) or hide the true market value.
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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.
Listing AgreementA contract between a property owner and a real estate broker that authorizes the broker to market and sell the property.
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.
AgencyA legal relationship in which a licensee (agent) acts on behalf of a principal (buyer or seller) in a real estate transaction.
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