In real estate, a sub-agent is responsible for bringing a potential buyer to a property. Although the sub-agent works directly with the buyer, he actually works on behalf of the real estate agent (representing the seller of the home).
Although no longer common in today’s real estate market, sub-brokers once played an important role in the process of buying and selling homes.
Read on to get a clearer sense of what a sub-agent is, their roles and responsibilities — including how they differ from buyer’s agents — and why they’re not used as often in current real estate transactions.
What is a sub-agent?
Typically, when you want to buy a property, you hire a buyer’s agent (also known as a selling agent after the contract is signed) to find homes that fit your parameters and guide the buying process. On the other hand, listing agents help sellers determine a reasonable price for their homes, coordinate viewings, and meet potential buyers.
However, this was not always the case. Until the early 1990s, most homebuyers did not have the type of representation they have access to today: independent real estate agents for buyers did not exist. An agent might show you properties listed by their brokerage firm, but more often than not you will need the help of an outside agent to buy a home that is not listed by that particular agent. This is where subagents would come into play.
So what is a sub-agent in real estate? Subagents get buyers to view homes, but they don’t represent them—that is, they don’t work on the buyers’ behalf. Instead, their fiduciary duty and loyalty lies with the listing agent and the seller. Typically, when a subagent brings in a buyer who eventually buys the home, that subagent receives a commission from the listing broker.
If you are buying or selling in today’s market, it is unlikely that you will be dealing with a sub-agent. Along with liability concerns associated with employing sub-agents in real estate transactions, the representation of alternative brokers explains why sub-agents are not used as often today. Since the buyer’s agents can now handle all real estate and brokerage transactions, sub-agents are no longer necessary for apartment seekers.
Often involved in real estate transactions today, buyer’s agents and listing brokers are two different types of brokers who specialize in treating the specific interests of buyers and sellers. From a liability perspective, if a sub-agent makes mistakes or omissions, the broker, seller and sub-agent are all legally responsible – creating a significant (and unnecessary) risk for the parties involved.
Example of a subagent
For example, suppose Anna and Steve are looking for a new home and are working with an agent named Kathy. One day the couple finds a house they like, but it’s not listed with Kathy’s real estate company.
In this case, Kathy could contact the real estate agent for that house and ask permission to show it to Anna and Steve. If the agent agrees, Kathy would become a sub-agent and receive a share of the commission if the couple decides to purchase.
How is a sub-broker different from a buyer’s broker?
Both sub-agents and buyers agents deal with people who want to buy a home. The difference is who they actually represent.
As the representative of a prospective home buyer, a buyer’s agent’s overall goal is to help their client find and purchase a suitable home. As part of this process, the agent identifies properties within the buyer’s budget and preference list, sets up showings with listing agents, and assists their client in bidding and closing a home.
Subbrokers also bring homebuyers to view properties, but the buyers are not strictly their customers: as noted, their fiduciary duty rests with the listing agent and the seller. Because their commission comes from the seller (and listing agent) on the sale, sub-agents may be less inclined to prioritize the best interests of the buyer.
When considering hiring a sub-agent in today’s real estate market, it can be helpful to keep these motivations in mind.