Beyond Bending Tell You How
Real estate transactions can be complex, and it’s not uncommon for multiple agents to be involved in a single deal. One of the terms you may hear when buying or selling a property is “subagent.” But what is a subagent in real estate, and how do they fit into the process? In this article, we’ll explain everything you need to know about subagents in real estate.
What is a Subagent in Real Estate?
A subagent is a real estate agent who works with a buyer or seller, but not as the primary agent. Instead, they work under the supervision of the primary agent, who is typically the listing agent in a property sale. The subagent’s role is to assist the primary agent in completing the transaction, but they don’t have a direct relationship with the buyer or seller.Subagency is not as common in real estate as it used to be, but it still exists in some states. In a subagency relationship, the subagent owes their fiduciary duties to the primary agent, not the buyer or seller. This means that they must act in the best interest of the primary agent, even if it conflicts with the buyer or seller’s interests.
How Does Subagency Work?
Subagency typically arises when a buyer’s agent shows a property that is listed by a different brokerage. In this situation, the buyer’s agent may become a subagent of the listing agent if they agree to represent the buyer as a subagent.When a subagency relationship is formed, the buyer or seller must be informed in writing. This disclosure should explain the role of the subagent and the fact that they owe their duties to the primary agent. The buyer or seller must then decide whether to proceed with the subagency relationship or find their own agent.
What are the Responsibilities of a Subagent?
As we mentioned earlier, a subagent owes their fiduciary duties to the primary agent, not the buyer or seller. This means that their responsibilities include:
- Assisting the primary agent in marketing the property
- Providing information about the property to potential buyers
- Assisting in negotiations
- Preparing and presenting offers and counteroffers
- Facilitating the transaction
However, a subagent cannot provide advice or guidance to the buyer or seller, as this would create a conflict of interest with their duties to the primary agent.
What are the Advantages of Subagency?
Subagency can be advantageous for both agents and clients in certain situations. For agents, it allows them to expand their reach and represent more buyers and sellers. For clients, it can provide access to properties listed with other brokerages and increase their chances of finding the right property.Subagency can also be beneficial in a hot real estate market, where properties can sell quickly. In this situation, having a subagent who can quickly show a property and prepare an offer can give a buyer an advantage over other potential buyers.
What are the Disadvantages of Subagency?
While subagency can be beneficial in some situations, it also has its drawbacks. One of the main disadvantages is the potential for conflicts of interest. Because the subagent owes their duties to the primary agent, they may not act in the best interest of the buyer or seller. This can lead to mistrust and frustration on the part of the client.Another disadvantage of subagency is the limited scope of the relationship. Because the subagent is not the primary agent, they may not have as much knowledge or information about the property as the primary agent. This can limit their ability to provide advice or guidance to the buyer or seller.
What is Dual Agency?
Dual agency is a related concept to subagency, but it involves a single agent representing both the buyer and seller in a transaction. Dual agency is not legal in all states, and it can be even more controversial than subagency.In a dual agency relationship, the agent owes their fiduciary duties to both the buyer and seller, which can create conflicts of interest. Dual agency is often discouraged, and some states require agents to obtain written consent from both parties before entering into a dual agency relationship.
Conclusion
Subagency can be a useful tool in the real estate industry, allowing agents to work together to complete transactions. However, it’s important for buyers and sellers to understand the limitations and potential drawbacks of subagency before entering into a relationship with a subagent.If you’re buying or selling a property and are unsure about subagency or any other aspect of the process, it’s always a good idea to seek the advice of a trusted real estate professional.
