Modifying a Listing Agreement with an Amendment
A listing agreement establishes the terms of a sale between a property owner and a real estate broker. Amendments to the original agreement can be made when the parties involved agree to modify the existing terms. This may involve making changes to the listing price, duration, marketing techniques, or commission. Any changes to the listing agreement should be documented with a signed amendment, which is attached to the original agreement.
How to Amend a Listing Agreement
Amending a listing agreement requires agreement and signature from the property owner. It is essential to explain the changes in detail, so all parties are on the same agenda. Below, you will find the steps involved in amending a listing agreement.
Step 1 – Discuss the Amendment with the Property Owner
When there is a need to amend a listing agreement, the broker should arrange a meeting with the property owner to discuss the proposed changes. The most common changes made include:
- Reducing the listing price;
- Modifying the expiry date of the listing;
- Ceasing the marketing of the property; or
- Changing the commission rate.
Step 2 – Draft the Amendment
Once a verbal agreement is reached, the amendment should be documented in a written form, clearly stating the changes made. Typically, this document should not exceed one or two pages, except in cases where there are many complex alterations. The broker often creates the form using agreed-upon language, in the presence of the property owner.
Step 3 – Sign and Attach the Amendment to the Listing Agreement
After creating the amendment, it should be signed by all involved parties, and copies distributed. Following the signature, the amendment should be attached to the original listing agreement, making it part of the contract.
Amending a listing agreement is an essential process. When the agreement needs to be changed, it is critical to discuss the proposed changes with the property owner before drafting the amendment. Once a verbal agreement is reached, document it in writing and attach the signed amendment to the original listing agreement. This helps ensure that all parties involved are on the same page.
- What is a listing agreement?
A listing agreement is a contract between a property owner and a real estate broker that outlines the terms of a sale.
- What are the common changes made to a listing agreement?
The common changes include reducing the listing price, changing the duration of the listing, ceasing the marketing of the property, or modifying the commission rate.
- Is it necessary to describe the changes in detail when amending a listing agreement?
Yes, it is essential to explain the changes in detail to ensure that all parties are on the same agenda.
- Who creates the amendment form?
The broker usually creates the amendment form using agreed-upon language with the property owner.
- What happens to the signed amendment?
After signature, the amendment is attached to the original listing agreement, making it a part of the contract.