Colibri Real Estate 30-Hour Alabama Post License Practice Exam

What could be a potential consequence for a broker who accepts a net listing?

1. Increased reputation

2. Disciplinary action by the Real Estate Commission

3. Automatic commission increase

4. License renewal exemption

The correct answer is: Disciplinary action by the Real Estate Commission

Accepting a net listing could lead to disciplinary action by the Real Estate Commission because net listings are often considered unethical and can compromise the fiduciary duty that a broker owes to their clients. In a net listing, the seller specifies a minimum amount they want to receive from the sale of their property, and the broker retains any amount over that as their commission. This arrangement can create a conflict of interest, as it may incentivize the broker to sell the property for a price significantly higher than the seller's desired amount without adequately representing the seller's best interests. Moreover, many real estate commissions, including in Alabama, discourage or prohibit net listings due to these potential ethical concerns. Brokers are expected to act in the best interest of their clients and to earn their commissions based on a fair market value of the property rather than a self-serving arrangement. As a result, engaging in such practices can result in penalties, including fines or loss of licensure, thus making it a serious consequence for brokers who pursue them.