Types of Real Estate Listing Agreements Explained
Open, exclusive agency, exclusive right to sell and net listings explained: who earns the commission in each, which is most common, and exam practice questions.
By PSI Exams Prep Editorial Team 6 min read
What is a listing agreement?
A listing agreement is the employment contract between a property owner and a real estate brokerage that authorizes the broker to market the property and sets out when the broker earns a commission. The main types of listing agreements are the open listing, the exclusive agency listing and the exclusive right to sell listing. A net listing describes how the broker is paid and is restricted in many states.
The listing agreement is with the brokerage, not the individual agent. Most states require it to be in writing for the broker to enforce a commission claim, and many require a definite expiration date. Check your state's license law for the exact rules.
Who gets paid in each type of listing?
Open listing
An open listing is non-exclusive. The seller can sign open listings with several brokers at once and can still sell the property on their own. Only the broker who is the procuring cause of the sale, the one whose efforts produced the buyer, earns a commission. If the seller finds the buyer, no commission is owed. Open listings are rare for homes, and you'll see them more often with commercial property and land.
Exclusive agency listing
An exclusive agency listing names one brokerage as the seller's only agent. If any broker sells the property, including a cooperating broker who brings a buyer, the listing broker earns the commission and shares it as agreed. The exception: if the seller finds a buyer on their own, with no broker involved, the seller owes no commission.
Exclusive right to sell
An exclusive right to sell listing gives one brokerage the right to the commission no matter who sells the propertyduring the listing period, even the seller. It gives the broker the most protection, which is why it is the most common type of listing for residential property. Listings shared through a multiple listing service (MLS) are typically exclusive right to sell.
Is a multiple listing a separate type?
Many listings also include a protection clause (also called a safety or extender clause). It entitles the broker to a commission if the property sells after the listing expires to a buyer the broker introduced during the listing, within a stated period.
Net listing
In a net listing, the seller names the amount they want to receive (the “net”), and the broker keeps anything above it as the commission. Suppose the seller wants $400,000 net and the property sells for $430,000. The broker keeps $30,000. If it sells for $400,000, the broker earns nothing.
Net listings create a conflict of interest: the broker benefits from understating the property's value to the seller. Many states prohibit or strongly discourage them. Others allow them with safeguards:
- Texas allows a net listing only if the seller requires one and is familiar with current market values (see the Texas Real Estate Commission's guidance).
- California allows them but requires the broker to disclose the amount of their compensation to the seller before the seller commits to the deal.
| Listing type | Number of brokers | Seller sells it themselves | Common use |
|---|---|---|---|
| Open | Any number | No commission owed | Commercial property and land |
| Exclusive agency | One | No commission owed | Sellers who may find their own buyer |
| Exclusive right to sell | One | Commission still owed | Most residential listings and the MLS |
| Net | Varies | Depends on the agreement | Restricted or prohibited in many states |
Listing agreements are a frequent topic in the contracts and agency sections of the exam. Antitrust rules also apply to how commissions are set; see the Sherman Antitrust Act in real estate.
Practice questions
Question 1. A seller signs an exclusive agency listing with Broker A. Two weeks later, the seller's coworker buys the house directly from the seller with no broker involved. Who is owed a commission?
- A. Broker A
- B. No broker
- C. Broker A and the coworker split it
- D. Any broker who showed the house
Show answer
Answer: B. Under an exclusive agency listing, the seller keeps the right to sell the property personally without owing a commission.
Question 2. Under which type of listing does the broker earn a commission even if the owner finds the buyer?
- A. Open listing
- B. Exclusive agency listing
- C. Exclusive right to sell listing
- D. Net listing
Show answer
Answer: C. An exclusive right to sell listing entitles the listing broker to the commission no matter who sells the property during the listing period.
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