How to Modify Commission After a Contract is Signed

🔹 1. Understand the Situation

Commission is a contractual term. Once a listing agreement or purchase agreement (RPA) is signed, the commission arrangement cannot be changed unilaterally. Any modification requires the written consent of all parties involved.

Typical scenarios where this comes up:

  • Seller and listing broker agree to reduce commission to save the deal.
  • Buyer’s broker modifies the Buyer Representation and Broker Compensation Agreement (BRBC).
  • A dispute arises and parties settle on a different commission split.

🔹 2. Use the Correct Forms

To make changes valid and enforceable, use California Association of Realtors (CAR) forms:

  1. Addendum (Form ADM)
    • General addendum that can be attached to the Purchase Agreement or Listing Agreement.
    • Wording example: “Buyer’s Broker commission shall be modified from 2.5% to a 2.%, payable at close of escrow.”
  2. Modification of Terms (Form MT)
    • Specifically for modifying the Listing Agreement.
    • Can be used to change the listing price, expiration date, or commission terms agreed between seller and listing broker.
  3. Cooperating Broker Compensation Agreement (Form CBC)
    • Used when adjusting compensation between the listing broker and the cooperating broker (buyer’s agent).
    • Ensures both brokers agree to the change before closing.

🔹 3. Who Must Sign?

  • Seller and listing broker: Any reduction or change to listing-side commission.
  • Buyer, buyer’s broker, and seller (if it affects what seller pays): When changing buyer’s agent compensation in the RPA or BRBC.
  • Both brokers: If changing how commission is split between listing and buyer’s broker.

🔹 4. Escrow Instructions

After forms are signed, forward them to escrow so the correct commission amount is reflected on the closing statement (CD). Without this, escrow will follow the original instructions.

🔹 5. Risk to Watch

  • Verbal agreements are not enforceable. Always reduce to writing.
  • Don’t modify after closing. Changes must be done before escrow closes.
  • If one party refuses to sign, the commission remains as originally agreed.

✅ Summary for Agents:
To modify commission after a contract is signed, use ADM, MT, or CBC forms (depending on the situation), get all required signatures, and send updated instructions to escrow. Never rely on verbal agreements.

Disclaimer:
The questions and answers provided are for general guidance only and may not cover all details or apply to every situation. If anything is unclear or you need further clarification, please visit car.org for official resources and the most up-to-date information from the California Association of REALTORS®.