A "net" arrangement sounds simple: you tell the broker the number you want to walk away with, the broker sells your home for whatever the market will bear, and keeps everything above your number instead of charging a stated commission. Some sellers are pitched this as a favor: no commission percentage to negotiate, no haggling, just a clean number in your pocket. In New York, it is also something a licensed real estate broker is not allowed to do.
This is a plain-language walk-through of what a net listing actually is, what New York regulation says about it word for word, why it creates a conflict of interest that runs directly against your broker's supposed duty to you, how it differs from the exclusive right to sell and exclusive agency listings brokers are allowed to write, and what to do if a broker, or anyone claiming to act as one, offers you a "net" deal.
None of this is a substitute for your own attorney's review of any document before you sign it. New York regulation sets a flat rule here, but how an arrangement is worded, and whether it is actually a disguised net listing dressed up in different language, is exactly the kind of question worth paying a lawyer to look at before, not after, you sign.
What Is a Net Listing?
New York regulation itself defines the term, and it is worth reading the state's own wording rather than a shorthand version of it. Under 19 NYCRR 175.19(a): "The term net listing as used herein shall mean an agency or other agreement whereby a prospective seller of real property or an interest therein, lists such property or interest for sale with a licensed real estate broker authorizing the sale thereof at a specified net amount to be paid to the seller and authorizing the broker to retain as commission, compensation, or otherwise, the difference between the price at which the property or interest is sold and the specified net amount to be received by the seller."1
Strip out the legal phrasing and the mechanism is this: you agree on a floor number you will accept, the broker sells above that floor, and whatever is left over is the broker's pay, with no percentage, no cap, and no requirement that the broker tell you what the home could actually fetch. A standard commission listing pays your broker a negotiated percentage of whatever price you receive, so a higher sale price is good for both of you. A net listing severs that alignment: the broker is paid on the spread, not on a share of your proceeds, and there is nothing in the arrangement itself that requires the broker to chase the highest offer once a buyer clears your floor.
Are Net Listings Legal in New York?
No, not for real property. The same regulation that defines the term also bans it outright, with no conditions attached and no disclosure that makes it lawful. 19 NYCRR 175.19(b) states, in full: "No real estate broker shall make or enter into a 'net listing' contract for the sale of real property or any interest therein."1
Read that sentence carefully, because the rule is not a disclosure requirement or a licensing formality that a well-informed seller can waive. It is a flat prohibition on the broker's side of the transaction: a licensed New York real estate broker is not permitted to make or enter into this type of contract at all, regardless of how sophisticated the seller is, how clearly the terms are spelled out in writing, or whether the seller asked for the arrangement. That puts New York in a stricter position than a handful of other states that allow net listings under narrow, written-consent conditions; here, a broker's signature on a net listing contract is itself the violation, independent of anything else the paperwork says.
One nuance worth flagging rather than glossing over: the rule's text covers "the sale of real property or any interest therein." A house, a condominium unit, and most interests in land fall squarely within that. A co-op apartment is a different legal animal, since what you actually sell is shares in a cooperative corporation together with a proprietary lease, a structure New York treats as personal property rather than real property in a number of legal contexts. Whether that technical distinction opens any gap for a co-op net-style arrangement is exactly the kind of question to put to your own attorney before assuming the identical bright-line ban automatically extends to a co-op sale the same way it plainly does to a one-to-four-family house or a condominium.1
The Conflict of Interest a Net Listing Creates
New York's own guidance to consumers on agency relationships describes what a seller's broker owes as "undivided loyalty," delivered to the "best advantage of the principal," the legal term for you.4 A net listing structurally works against that duty rather than alongside it. Once a buyer's offer clears your agreed floor, every additional dollar the broker negotiates for goes to the broker, not to you. Push the sale price up and the broker's own payday grows at the same rate your net proceeds stay flat. There is no built-in reason for the broker to keep negotiating once your number is met, and every reason to close the deal quickly at whatever price gets there.
This is also why New York's consumer guidance singles out undivided loyalty as the duty most directly at risk whenever an agent's own interest and the client's interest are not pointed in the same direction, the same concern that underlies the state's separate rules requiring informed written consent before a broker can represent both sides of one deal.4 A net listing creates that same misalignment on a single side of the table, between you and the one broker who is supposed to be working only for you, which is a meaningful part of why New York does not leave the decision to a disclosure form and instead bans the arrangement outright.1
The safest response to a net listing offer is a plain no, in writing, followed by a standard listing agreement instead.
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Net Listing vs. Exclusive Right to Sell vs. Exclusive Agency
New York regulation separately spells out the two listing structures brokers are actually allowed to use, and both are built around a commission, not a spread. Under 19 NYCRR 175.24(b), any commission agreement for an exclusive listing of residential property must include this exact required explanation, printed or attached and signed or initialed by the homeowner: "An 'exclusive right to sell' listing means that if you, the owner of the property, find a buyer for your house, or if another broker finds a buyer, you must pay the agreed commission to the present broker. An 'exclusive agency' listing means that if you, the owner of the property find a buyer, you will not have to pay a commission to the broker. However, if another broker finds a buyer, you will owe a commission to both the selling broker and your present broker."1
| Feature | Net Listing | Exclusive Right to Sell | Exclusive Agency |
|---|---|---|---|
| Legal for a NY broker to sign | No, banned outright | Yes | Yes |
| How the broker is paid | Keeps everything above your set floor price | Negotiated percentage commission on the sale price | Negotiated percentage commission on the sale price |
| You find your own buyer | Not applicable, broker still keeps the spread | Commission still owed | No commission owed |
| Broker's incentive on price | Close fast once your floor is cleared | Higher price benefits both sides | Higher price benefits both sides |
The structural difference is the whole point: in both permitted listing types, the broker's compensation moves up and down with your sale price as a share of it, so the broker's financial interest tracks yours. In a net listing, the broker's pay is whatever is left after your number is covered, which is precisely the misaligned incentive New York's regulation exists to shut down.1 For a full walk-through of the clauses that do appear in a lawful New York listing agreement, including how the six-point-type explanation above has to be presented and what a protection-period clause can hold you to after the term ends, see the guide on NYC listing agreement clauses.
Why Net Listings Are Kept Off the MLS
Even outside New York's own ban, the real estate industry's own multiple listing service rules independently exclude net listings from the marketplace where most buyers' agents actually search. The National Association of Realtors' Handbook on Multiple Listing Policy, Policy Statement 7.61 on Net Listings, states plainly: "Multiple listing services shall not include net listings in compilations of current listing information."3
Practically, that means a net listing is not just legally barred for a New York broker to write; it is also structurally shut out of the shared listing databases that feed sites buyers actually search, the same databases that drive normal exclusive right to sell and exclusive agency listings to the widest possible buyer pool. A broker cannot route around the New York ban by simply keeping the arrangement off the paperwork label while functionally treating it as a spread-based deal, since the same MLS rule applies regardless of what the internal agreement is called.3
What Happens to a Broker Who Offers One Anyway
Because 19 NYCRR 175.19(b) is a regulation issued under New York's real estate licensing statute, a broker who signs a net listing contract has committed a violation the state can discipline directly, not merely a business practice a seller might quietly go along with. Real Property Law Section 441-c gives the New York Department of State authority to revoke or suspend a license, or impose a fine, for a "violation of any provision of this article" governing real estate brokers, among other grounds including fraud, dishonest or misleading advertising, and demonstrated untrustworthiness.2
The penalties on the table are specific. The Department of State can revoke a license outright, suspend it "for such period as the department may deem proper," issue a formal reprimand, or impose a fine of up to $2,000 per violation, with half of any fine directed to the state's anti-discrimination housing fund.2 A revocation carries a further consequence beyond the immediate penalty: a broker or salesperson whose license is revoked cannot reapply for a new license until at least 1 year after the revocation takes effect.2 If you believe you were offered, or worse, signed, a net-style arrangement with a New York broker, that conduct is a reportable violation, not just a bad contract term to try to renegotiate quietly.
Red Flags: How a Net Arrangement Gets Disguised
Because a broker cannot lawfully call a deal a "net listing" in New York, a version of the same conflict sometimes shows up dressed in different language instead. None of the following automatically means fraud is happening, but each is worth stopping and asking a direct question about before you sign anything.
- A broker proposes that you set a "walk-away number" or a price you would "definitely accept," and structures compensation around the gap between that number and the eventual sale price, rather than a stated commission percentage on the full sale price.
- You are discouraged from seeing recent comparable sales, an appraisal, or a competitive market analysis before agreeing on your number, so you have no independent way to judge whether the floor you are accepting is actually below what the home could fetch.
- The written agreement does not state a specific commission percentage or flat fee anywhere, and instead ties the broker's pay to whatever amount exceeds a set figure.
- The broker frames the arrangement as simpler for you, with no percentage to negotiate, while resisting a straightforward answer to "what percentage commission would you charge instead."
- You are pushed to sign quickly, before your own attorney has reviewed the agreement, which runs against the ordinary practice in New York of having counsel review a listing agreement and, separately, the contract of sale.
Any of these is a reasonable prompt to ask, in plain words, whether the broker is proposing you pay a standard percentage commission on the full sale price. A broker operating lawfully in New York should be able to answer that question immediately and in writing.
What to Do If You Are Offered a Net Arrangement
Start by asking the broker, directly and in writing, to restate the compensation as a specific commission percentage of the final sale price instead. A broker who intends to comply with New York regulation should be able to make that switch without resistance, since a percentage-based exclusive right to sell or exclusive agency listing is exactly what 19 NYCRR 175.24 already governs and is the normal way a New York listing agreement is written.1
Before you sign anything, get your own read on what the home is worth, independent of whatever number the broker proposed as a floor; a free home valuation is one way to get a market-based starting point to compare against. Have your own real estate attorney review the actual listing agreement in front of you, not a verbal description of it, since New York closings routinely involve an attorney regardless of listing type, and a lawyer reviewing the agreement before you sign is the point where a disguised net arrangement is easiest to catch. If you believe a broker has offered or entered into an actual net listing, you can raise it with the New York Department of State, Division of Licensing Services, which has express authority to fine, suspend, or revoke a broker's license over the conduct.2
If your actual goal in wanting a net-style arrangement was avoiding commission negotiation altogether, there are lawful paths to that instead of an illegal one: an exclusive agency listing that lets you find your own buyer commission-free, described in the comparison above, or selling without a listing broker entirely, covered in the guide on for sale by owner in NYC. For a full breakdown of how commission actually gets negotiated and paid on a lawful New York listing, including what changed for buyer-agent compensation in 2024, see the guide on real estate commission in NYC.
Frequently Asked Questions
What exactly is a net listing?
It is an arrangement where you set a specified net amount you will accept for your home, and the broker keeps as compensation whatever the property sells for above that amount, instead of being paid a stated commission. New York regulation defines the term this way under 19 NYCRR 175.19(a).1
Are net listings legal in New York?
No. 19 NYCRR 175.19(b) states that no real estate broker shall make or enter into a net listing contract for the sale of real property or any interest therein. The ban applies regardless of disclosure or how clearly the terms are written, and it applies to the sale of real property specifically.1
What happens to a broker who enters into a net listing in New York?
It is a violation the New York Department of State can discipline under Real Property Law Section 441-c, which allows revocation, suspension "for such period as the department may deem proper," a reprimand, or a fine of up to $2,000 per violation. A revoked license cannot be reinstated for at least 1 year.2
Why does a net listing create a conflict of interest?
Because the broker's pay comes from the spread above your set floor rather than a share of your total proceeds, the broker has no built-in financial incentive to negotiate you a higher price once that floor is cleared. New York's own consumer guidance describes a seller's broker as owing "undivided loyalty" to the seller's best advantage, a duty a net listing's payment structure works against rather than alongside.4
How is a net listing different from an exclusive right to sell or exclusive agency listing?
Both permitted listing types pay your broker a negotiated commission that is a percentage of your actual sale price, so a higher price benefits both of you. Under exclusive right to sell, the broker earns commission regardless of who finds the buyer; under exclusive agency, you owe no commission if you find the buyer yourself. A net listing instead pays the broker the entire spread above a set floor, with no percentage structure and no alignment between a higher price and your own proceeds.1
Can a net listing show up on the MLS?
No. Separate from New York's outright ban, NAR's Handbook on Multiple Listing Policy, Policy Statement 7.61, states that multiple listing services shall not include net listings in compilations of current listing information, so the arrangement is also shut out of the shared databases most buyers' agents search.3
Does the co-op vs. condo distinction matter for the net listing ban?
The regulation's text bans net listings for "the sale of real property or any interest therein." A house or condominium is real property; a co-op apartment is technically shares in a corporation plus a proprietary lease, treated as personal property in several legal contexts. Whether that distinction changes anything for a co-op listing is worth confirming with your own attorney rather than assuming either way.1
What should I do if a broker offers me a net-style arrangement?
Ask the broker in writing to restate the deal as a standard percentage commission instead, get an independent sense of your home's value before agreeing to any floor price, and have your own attorney review the actual listing agreement before you sign. You can also report the conduct to the New York Department of State, Division of Licensing Services, which can fine, suspend, or revoke the broker's license.12
