Listing agreements: exclusive right to sell, exclusive agency, open, and net listings
Lesson 38 of 70 · All lessons · Up next: Buyer representation agreements →
Two questions identify the listing
A listing agreement employs a broker; it is not the seller-buyer purchase contract. Ask how many listing brokers the owner may employ and whether an independent owner sale earns the listing broker a commission. Read the agreement for exceptions, commission triggers, and protection periods; these are standard comparisons.
Exclusive right to sell
One brokerage holds the exclusive listing. A sale during the term under the commission provisions earns the agreed compensation whether the buyer is found by the listing broker, a cooperating broker, or the owner. Cooperation with other brokers is compatible with an exclusive listing.
Exclusive agency
One brokerage holds the listing, but the owner retains the right to find a buyer independently and sell without owing the listing commission. A broker-produced buyer does not fit that exception.
Open listing
The owner may engage several brokers nonexclusively and may sell independently. The broker who is the procuring cause of the completed sale earns the agreed commission. Procuring cause means the effective chain of events leading to the sale, not simply the first advertisement or introduction. Other open-listing brokers do not receive equal shares just for holding listings.
Net listing: a compensation method
A net listing bases the broker's commission on the difference between sale proceeds and the owner's desired amount. It does not by itself answer the exclusivity question. With $300,000 in relevant proceeds and a $280,000 owner amount, the difference is $300,000 minus $280,000, or $20,000, assuming no other deductions or cap.
The conflict is that extra proceeds may enrich the broker without increasing the owner's specified return. Texas permits net listings only when the principal requires one and appears familiar with current market values. The agreement must assure at least the principal's desired price and specify a maximum commission. The broker remains obligated to negotiate the best possible transaction for the principal. These Texas safeguards come from 22 Tex. Admin. Code § 535.16(a)-(b).
Key terms
Sample questions
Which standard listing gives one brokerage the listing and provides a commission even when the owner independently finds the buyer during the term?