Sub-agent

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For a more detailed explanation of real estate agency and non-agency relationships, see Real estate broker

Sub-agent (or, broadly, Sub-agency) is a real estate term describing the relationship which a real estate broker and his/her agents have with a buyer of a property.

Traditionally (and lasting until the early 1990s for the most part), the broker provided a conventional full-service, commission-based brokerage relationship under a signed listing agreement only with a seller, thus creating under common law in most states an agency relationship with fiduciary obligations. The seller was then a client of the broker.

However, no such agency relationship existed with the buyer, and the broker's agents worked as what was then called his or her customer. In this situation, during the entire period in which the buyer looks at properties, enters into a real estate contract, and finally closes on one, that broker/agent functions solely as the sub-agent of the seller’s broker.

Some clear disadvantages exist for the buyer under sub-agency. There is no obligation to obtain the best price or terms for the buyer, since the broker was the sub-agent of another broker and obligated to obtain the best terms for that seller, generally someone who he/she had never met and with whom no business relationship existed. Many states, notably Florida^[1] and Colorado,^[2] have abolished sub-agency in favor of written Buyer Brokerage Agreements or the creation of Transaction Brokerage.

It was only with the advent of Buyer brokerage (or the legal representation of a buyer by a broker), that a buyer became a client of the broker and entered into the same fiduciary relationship enjoyed by the seller.