What is a sub agency in real estate and how can they benefit you?

In real estate, sub-agency refers to a situation where an agent working with a buyer or seller authorises a representative with some of their duties and responsibilities. The sub-agent works under another agent, called the primary agent, to help facilitate several transactions. This concept arises when multiple real estate brokers are representing different parties.

Typically, we have what we call a listing agent, also known as the seller’s agent. They list properties for sale and have a legal agreement with the seller to represent their interest in the sale. There’s also a buyer’s agent, who helps potential buyers find and purchase a property.

In some cases, these real estate agents may choose to involve other brokers to help them in different areas of transactions. That’s where sub-agents come into the scene.

What are the responsibilities of a sub-agent?

The duties of a sub-agent depend on the jurisdiction, but in general, some of their responsibilities include:

Helping the primary agent.

The sub-agent works under the direction of the primary agent. One of their core obligations is to assist the primary broker in different tasks related to real estate transactions.

Representing the client.

As the sub-agent works for the primary agent, they have loyalty and fiduciary commitments to the client. This means they should ensure the best interests of their client, obey lawful instructions, be transparent in every important transaction, keep customer information confidential, and secure accurate records of finances.

Be involved in property showings.

Another role of a sub-agent is to show properties to potential buyers. They may be asked to provide information about the properties and help them assess whether a house or a building is in accordance with their needs.

Documentation.

As part of the real estate requirements, sub-agents will help in completing necessary paperwork, including contracts, addendums, and disclosure forms.

Negotiation and communication.

Sub-agents are responsible for communication between the primary agents, clients, and other parties. They may convey offers, counteroffers, and other information. They will also help mediate between the clients and the primary broker to reach agreeable terms for the property sale or purchase.

What is the scope of authority of a sub-agent?

The scope of authority is the extent of decision-making powers granted to the sub-agent. This depends on the agreement, local regulations, and arrangements, but one general aspect is supervision by the primary agent. They can only operate under their command and can only do tasks delegated to them. That said, they have limited decision-making authority. Major choices and contractual matters may require the primary’s approval.

They are also tasked with documentation, but it is the primary agent’s responsibility to oversee important communications, ensuring all papers adhere to legal and ethical standards. They are expected to operate within the regulations established by the real estate laws of their jurisdiction.

What are the limitations and boundaries that a sub-agent has?

Conflict of interest is a big no-no in this kind of relationship. Sub-agents should not enter into exclusive agreements and cannot represent both the buyer and seller in a transaction. They should not disclose any information that would benefit the buyer more than it should, nor give any data that would compromise that seller’s advantage.

In addition, they should only follow a communication protocol established by the listing or buyer agent. It ensures that all concerned parties receive consistent information.

What are the benefits of working with a sub-agent?

The concept of sub-agents is not as common as it was before, but working with them can render several benefits. Some of them are:

Expanded reach and expertise.

Bringing a sub-agent into the transaction may bring more prospective buyers. Potentially, they can give additional networks and valuable expertise in a type of property or specific neighbourhood. These will be beneficial when dealing with a diverse market.

Increased efficiency.

Having an extra hand means a more evenly distributed workload. Delegating specific tasks can enhance the efficiency of the transaction. This can also result in a more personalised and attentive service to clients, letting the primary agency focus more on the strategy side.

Cost-effectiveness.

Sub-agents may be compensated and given a commission based on the work they perform, making it more cost-effective for the primary agent and their brokerage.

There are lots of benefits of working with a sub-agent. But to really make this relationship work, both parties should have clear communication, coordination, and observation of legal and ethical standards. From the start, the primary agent should make the agreement clear to avoid any confusion and conflicts.

FAQs about sub-agents

Are sub-agents common in real estate transactions?
What is the difference between a sub-agent and a buyer’s agent?
Do clients need to be aware of sub-agents in a transaction?
Do all real estate transactions involve sub-agents?
Whitepaper

Guide to AI Adoption for Real Estate Firms

Is your real estate business ready for AI technology? Real estate technology leaders know that artificial intelligence (AI) brings unmatched opportunities for the industry. The technology is a gamechanger for owners, operators, investors, and tenants…

Read the Whitepaper

Reinvest in some more great content:

Customer Event

MRI Ascend APAC 2024

Find out more

Select your region

45000+

Clients

20.1m

Units

4.2m

Leases

300+

Partners

170+

Countries