What type of listing is prohibited under state law?

A listing where the firm's compensation exceeds a stipulated net price is prohibited under state law because it can create a conflict of interest. When a listing agreement allows the broker to receive compensation that surpasses a pre-established net amount, it may incentivize the broker to prioritize their financial gain over the seller's interests. This can result in the broker not adequately representing the seller's position or effectively negotiating on their behalf.

In many jurisdictions, proper real estate practices are designed to ensure transparency and fairness in real estate transactions. By stipulating a net price, sellers can protect themselves from potential financial abuses and ensure that they understand the actual amount they will receive from the sale of their property after commissions and other fees are taken into account. Thus, regulations prohibit such arrangements to maintain ethical standards and trust in real estate practices.

The other types of listings—such as those with a fixed commission rate, requiring upfront fees, or having no expiration date—may have varying legal considerations in specific contexts, but they do not inherently conflict with regulations designed to protect consumers in the same way that listings with compensation exceeding a stipulated net price do.