What is intermediary representation and what is a sub-agent?

When representing a seller, our real primary role is to market your home to other brokers, agents, and their buyers to get you the best possible deal. Marketing to and procuring unrepresented buyers for your home is a conflict of interest with you and other brokers and agents. Mistakenly, many homeowners expect their listing agent to do the same things that a selling agent does – find someone to buy their home. The point is no one can represent you and a buyer fairly and impartially at the same time.

Even with the biggest brokers, it is a rarity for this reason. When looking at historical sales, 99% of the time the selling agent is exclusively representing the buyer and is with another broker. Listing agents do want leads from unrepresented buyers for your home, just not to buy your home. Most typically we do not represent both sides of a transaction and act only as either the seller’s or buyer’s sole representative in a transaction. 

Intermediary Representation is when a seller authorizes us in writing to act as an “Intermediary” agent for both parties and the buyer will not have an exclusive buyer agent. As an Intermediary, Texas law requires agents to treat all parties impartially and fairly and not disclose confidential information. Essentially, we simply become a go-between and do not provide advice and opinion to either side. Likewise, both buyer and seller should not disclose confidential information to us or any agent acting as an intermediary. We are only willing to assume this role for a seller and buyer in very special situations such as friends and family deals or when buyer and seller are sophisticated and truly do not want a buyer agent involved to create savings. 

Sub-agents are agents of the listing broker other than the listing agent and are assigned by the listing broker to help an unrepresented buyer. Sub-agents solely represent the seller as their fiduciary. 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 whom the sub-agent had never met and with whom no direct business relationship existed. It is important the sub-agent makes it clear to the buyer what their role is to avoid any confusion.

Many states have abolished sub-agency in favor of written Buyer Brokerage Agreements or the creation of Transaction Brokerage. Under current Texas law, sub-agency arrangements have not been abolished. Although, if an agent of the listing broker aids a buyer in a transaction that agent is a sub-agent of the seller and must put the interests of the seller first. 

What is intermediary representation and what is a sub-agent? Read More »