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Brian Walker, Real Estate Pro in Belfast, ME

Sub-agency why ignore the option?

Asked by Brian Walker, Belfast, ME Thu Jan 16, 2014

No agent in my market offers compensation or cooperation for sub-agents. Clearly it is not in the best interest of a buyer to work with a sub-agent. But isn't it in the best interest of the seller to at least offer cooperation and compensation? I'd love to hear from other agents from the point of view as a listing agent. Do you offer sub-agency cooperation and why?

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No we do not. Because it can create liability for the Seller. Potentially, you have an agent who does not know the Seller, may or may not know the property, representing the Seller. If the Subagent misrepresents the property to a buyer, they could embroil the Seller in a lawsuit.

Subagency is left over from the dinosaur era. When ALL agents represent the Seller. We offer compensation to transaction brokers and buyer agents. So the agent bringing the buyer will get paid whether they represent the buyer or not. There is no need to allow the agent bringing the buyer to represent the Seller. If you explain subagency to a Seller clearly, and I have, they will demand that you not permit this.

The real question should be: Why on earth would you permit and compensate subagency?
0 votes Thank Flag Link Thu Jan 16, 2014
It's too messy. We used to practice it, but no longer do. Thank goodness!
0 votes Thank Flag Link Thu Jan 16, 2014
It's too unclear who's representing who. I mean, how in the world can a sub-agent be working for a seller they have never met?
Flag Thu Jan 16, 2014
I will honestly say I am not qualified to answer this question as it still has baffled. What I will say is that I have discovered that there are large differences from state to state, sometimes even county to county, in how these terms are defined and how the rules and laws are interpreted. I would simply warn you to put most of your weight on the advice of experienced agents but mostly attorneys closest to where you operate, especially within the same state.
0 votes Thank Flag Link Thu Jan 16, 2014
Brian, based on my understanding of this, it is not in your seller's or your agency's best interest to have another agent who is not affiliated with you to act on your seller's behalf. The seller is not a client of the subagent - so there is no fiduciary responsibility. But in a sub-agency, the agent represents that they are part of your team - that they represent your firm even though they don't. That would lead to potentially a lot of legal repercussions should things go south. I don't believe any agency in Maine compensates sub-agencies any more because of the difficulties, and if you were to call our legal hotline, I believe they would tell you not to do it.

That being said, there is no reason why you couldn't work with another agency to facilitate showings of a property, for example, and figure out how to compensate them without entering into a sub-agency agreement. That's done quite frequently as long as the seller approves. However, if they do show the house, it must be clear that they are in no way affiliated with your company or acting on the seller's behalf.

I think it is very important for the client to know who has the fiduciary responsibility to them in addition to the other responsibilities that go along with a client/agency relationship and not to muddy the waters with a sub-agent.

The relationship form (form 3) does list 3 types of relationships the person can have with the broker, but they are single agency, appointed agency, and disclosed dual agent. Otherwise you are a customer. There is no mention of subagency on this form.
0 votes Thank Flag Link Thu Jan 16, 2014
We don’t have sub agency in Florida. Florida real estate law offers Single Agency, Transaction Agency, Consent to transfer fromSingle Agency to Transaction Agency, and no representation.
0 votes Thank Flag Link Thu Jan 16, 2014
I'm surprised to hear that. In our market this is always an option. Though one that is rarely used as most buyer want their own dedicated agent.
0 votes Thank Flag Link Thu Jan 16, 2014
Are you talking about co-brokering?

My understanding of sub-agency is that the agent would work as an agent of the seller, not the buyer.
0 votes Thank Flag Link Thu Jan 16, 2014
Part 2 - The listing agent determines the compensation given to sub-agents. and many/most/all seem to choose not to offer compensation to sub-agents at all. It seems to me that if we educated our sellers about these three types of relationships they would demand that we offer sub-agency compensation. So are we doing a disservice to our sellers by not encouraging sub-agency?
Flag Thu Jan 16, 2014
Thank you for the clarifying question. That is something entirely different.
Washington may or may not recognize sub-agency. Here is a potential scenario as it applies in Maine.
An agent receives a lead from Trulia, for example, Where a potential buyer wants to see a house listed by another agent. The agent might arrange to meet the buyer for the first time at the house they are interested in. When they meet the agent is required to give the customer a form called a brokerage relationship for that basically states that the agent does not work for the buyer and anything that the buyer says can shared with the seller. At that point the customer needs to choose between 3 types of relationships that they can have with the agent.
1- Transaction broker - No loyalty, no advice, administrative functions only,
2- buyers' agent - Advises the buyer, acts in buyer's best interest, buyer may have to pay for services.
3- Sub-Agent - Helps buyer but owes loyalty to the seller
Flag Thu Jan 16, 2014
No one here offers it and we are told it is a bad idea to have another agent acting as the agent of the seller. What if they said or did something that brought on a problem? Or a suit? As a buyers agent it would not involve the seller, but as a sub agent to the seller the seller could be involved by that agent that you have no control over. So removing the option to be a sub agent is what we practice here.
0 votes Thank Flag Link Thu Jan 16, 2014
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