Sub-Agent

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Definition: Sub-Agent


Sub-Agent


Full Definition of Sub-Agent


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

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

The seller was then a client of the broker.

However, no such agency relationship existed with the buyer, and the broker’s agents helped the buyer (who was typically known as his or her “customer”).

In this situation, during the entire period in which the buyer looked at properties, entered into a real estate contract, and finally closed on one, that broker/agent functioned 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, as sub-agent, was obligated to obtain the best terms for the seller, generally, someone who he/she had never met and with whom no direct business relationship existed. Many states, notably Florida and Colorado, have abolished sub-agency in favour of written Buyer Brokerage Agreements or the creation of Transaction Brokerage.

It was only with the advent of Buyer brokerage in the 1990s – 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.


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Definition Sources


Definitions for Sub-Agent are sourced/syndicated and enhanced from:

  • A Dictionary of Economics (Oxford Quick Reference)
  • Oxford Dictionary Of Accounting
  • Oxford Dictionary Of Business & Management

This glossary post was last updated: 5th May, 2020 | 0 Views.