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In real estate, a sub-agent is responsible for bringing a prospective buyer to a property. However, even though the sub-agent is working directly with the buyer, they are actually working on behalf of the listing broker (who represents the seller of the home).
Although they aren’t common in today’s real estate market, sub-agents once played an important role in the buying and selling of 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 aren’t used as much in current real estate transactions.
What is a sub-agent?
Typically, if you’re looking to purchase a property, you will hire a buyer’s agent (also called a selling agent, after the contract is signed) to find homes that fit your parameters, and to guide the purchase process. On the other side, listing agents help sellers determine an appropriate price for their homes, coordinate showings and meet with prospective buyers.
However, this hasn’t always been the case. Up until the early 1990s, most home buyers didn’t have the type of representation that they have access to today: Independent real estate agents for buyers didn’t exist. An agent could show you properties listed by their brokerage firm, but most often, you would need the help of an outside agent to purchase a home that wasn’t listed by that specific broker. This is where sub-agents would come in.
So, what is a sub-agent in real estate? Sub-agents bring 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 their allegience lies with the listing agent and the seller. If a sub-agent brings in a buyer that ends up purchasing the home, that sub-agent will typically earn a commission from the listing broker.
If you’re buying or selling in today’s market, it’s unlikely you will deal with a sub-agent. In addition to liability concerns surrounding the employment of sub-agents in real estate transactions, alternative agent representation explains why sub-agents are not utilized as much these days. Because buyer’s agents can now deal with any property and brokerage, sub-agents are no longer necessary for home-hunters.
Buyer’s agents and listing agents are now commonly involved in real estate transactions, two different types of agents that specialize in dealing with buyers’ and sellers’ specific interests. From a liability standpoint, if a sub-agent makes any mistakes or omissions, the listing broker, seller and sub-agent are all legally responsible – which adds significant (and unnecessary risk) for the involved parties.
Example of a sub-agent
Let’s say, for example, that Anna and Steve are in the market for a new home and are working with an agent named Kathy. One day, the couple finds a house that they like, but it’s not listed by Kathy’s real estate firm.
In this case, Kathy could contact the listing agent for that home and request 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-agent different from a buyer’s agent?
Both sub-agents and buyer’s agents deal with people seeking to purchase a home. The difference lies in who they actually represent.
Acting as a 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 will identify properties within the buyer’s budget and preference list, set up showings with listing agents and assist their client with submitting offers and closing on a home.
Sub-agents also bring home buyers to view properties but the buyers aren’t their clients, strictly speaking: As mentioned earlier, their fiduciary duty lies with the listing agent and the seller. Because their commission from the sale comes from the seller (and listing agent), sub-agents may be less inclined to keep the buyer’s best interests at the forefront.
If you are considering utilizing a sub-agent in today’s real estate market, it may be helpful to keep these motivations in mind.