What is the nature of a net brokerage agreement?

A net brokerage agreement is designed to ensure that the seller receives a predetermined net amount from the sale of their property after all expenses, including broker fees, have been deducted. This type of agreement allows the seller to have clarity and assurance about the minimal amount they will take home from the sale. The broker, in turn, would work to sell the property at a price that exceeds this net amount, as their commission is based on the final sale price above that threshold. This structure shifts some of the risk onto the broker, incentivizing them to negotiate effectively and achieve a high sales price.

The other options do not accurately reflect the purpose of a net brokerage agreement. A fixed fee scenario would not provide the seller with an assurance of net proceeds, while guaranteeing a sale price does not capture the essence of a net agreement, which focuses instead on the net proceeds to the seller after all expenses. Additionally, while reducing closing costs might be a beneficial aspect of a transaction, it is not a primary objective of a net brokerage agreement.