What subagency was
Subagency once made every cooperating agent the seller’s agent. Here is how it worked, why it collapsed, and where it still appears.
The MLS offer of subagency
A listing broker who put a property in the MLS extended, along with it, an offer of subagency to every other participating broker. A cooperating broker who worked that listing accepted the offer by conduct, and their agents became subagents of the seller. No one signed anything with the seller, and the relationship formed anyway.
The buyer had no representative
The person riding around looking at houses was a customer. They were owed honesty and disclosure of known material defects, and nothing else. Anything they said about their budget, their deadline or their enthusiasm was information the subagent owed to the seller.
Cooperation under subagency compared with buyer agency
| Attribute | Subagency | Buyer agency |
|---|---|---|
| Who the cooperating agent represents | The seller, as a subagent | The buyer, as a buyer agent |
| Buyer's status | Customer, no advocacy | Client, full fiduciary duties |
| Buyer confidences | Reportable to the seller | Confidential to the buyer |
| Who the seller is liable for | Cooperating agents in other firms | The listing firm only |
| Written agreement with the buyer | Rarely used | Standard, and required in most states since 2024 |
| How the arrangement is created | MLS offer of subagency, accepted by default | Buyer representation agreement signed at the start |
| Disclosure to the buyer | Often absent before the 1990s | State agency disclosure form, signed and dated |
Representative of common practice and state agency law as of 2025. Rules vary by state and by MLS. Not legal advice.
Why it made sense at the time
Cooperation needed a legal theory. Subagency explained why one firm could work another firm’s listing and share the commission, and it did so with a doctrine that already existed. The problem was never the mechanics of cooperation. It was that the arrangement described a relationship nobody in the car understood.
Where it sits in the vocabulary
Subagency is a fourth arrangement alongside single agency, dual agency and designated agency. It is the only one that is mostly historical, and it is still worth knowing because the term appears in statutes, MLS rules and listing input fields.
Why it collapsed
Liability moved to sellers, buyers found out, and disclosure laws put the arrangement in writing.
How the arrangement changed
| Period | Shift | What changed in practice |
|---|---|---|
| 1970s to 1980s | MLS subagency is the standard | Participation in the MLS carries a blanket offer of subagency, so cooperating agents represent the seller by default and most buyers do not know it |
| Late 1980s | Federal Trade Commission findings surface the confusion | Survey work in the FTC's 1983 real estate brokerage study found most buyers believed the agent showing them homes represented them, which fed a decade of state reform |
| 1990s | State agency disclosure laws spread | States begin requiring written disclosure of who represents whom, which forces the subagency arrangement into plain language in front of the buyer |
| 1993 | MLSs drop mandatory subagency | The National Association of Realtors changed policy so that offers of subagency became optional rather than a condition of MLS participation, and most boards moved to optional or none |
| Mid 1990s onward | Buyer agency becomes the norm | Cooperating brokers work with buyers as buyer agents, and subagency drops to a rarely selected option in MLS listing input |
| 2024 | Written buyer agreements become standard practice | Under the NAR settlement practice changes effective August 2024, MLS participants working with a buyer must have a written agreement before touring, which leaves no room for an undocumented arrangement |
Sources: FTC, The Residential Real Estate Brokerage Industry (1983); National Association of Realtors MLS policy change on optional subagency (1993); NAR settlement practice changes effective August 17, 2024.
Sellers carried other firms’ mistakes
A principal answers for the acts of an agent, and a subagent is an agent. When a cooperating agent misdescribed a septic system or a boundary, the claim reached the seller. Sellers had no way to supervise a licensee at a firm they had no contract with, which is a poor position to be liable from.
Buyer agency filled the gap
Once buyers learned they could have their own advocate, demand moved quickly. Buyer representation agreements spread through the 1990s, and cooperating brokers found it easier to serve the person in front of them than to owe duties to a seller across town.
Disclosure was the finishing blow
Written agency disclosure forced the sentence to be said out loud. Explaining to a buyer that the agent driving them to showings must report their maximum price to the seller ended most subagency conversations on the spot.
Where it still appears
Some MLSs retain subagency as an option a listing broker can offer and a cooperating broker can accept.
Optional, and rarely selected
Listing input screens in some markets still carry a subagency field, usually defaulted off. It shows up more often on unusual property types, on estate and relocation listings handled by out of area firms, and on transactions where a buyer declines representation but still wants to be shown property.
Accepting it changes who you work for
A cooperating broker who accepts an offer of subagency takes on fiduciary duties to a seller they have not met and gains a buyer who almost certainly thinks otherwise. Most brokerages resolve this with a written policy declining subagency in all cases, which turns a judgment call into a default.
Compensation is a separate question
Being paid from the listing side has never determined agency, and after the 2024 practice changes compensation is negotiated more openly than before. A buyer agent compensated through the transaction is still a buyer agent, and a subagent working for free would still represent the seller.
The liability chain
The reason listing brokers stopped offering subagency is that it exported their client’s exposure to strangers.
How liability travels under subagency
- 1
Subagent conduct
A cooperating agent in another firm tells a buyer the basement has never taken water, without checking
- 2
Cooperating broker
The agent's own broker is responsible for supervising them, and is named in any claim
- 3
Listing broker
Having extended the offer of subagency, the listing broker sits in the chain between the subagent and the seller
- 4
Seller exposure
The statement is imputed to the principal, so the seller answers for a licensee they never hired, met or supervised
Nobody in the chain can supervise the top of it
The seller cannot direct the subagent. The listing broker cannot discipline another firm’s licensee. The cooperating broker supervises the agent but did not create the duty. Responsibility and control sit in different places, which is the condition that produces claims.
Insurance follows the same path
Errors and omissions carriers priced this in. Brokerages that accepted subagency were taking duties to principals outside their own client base, and application questions about subagency practice were routine before the arrangement faded.
The record keeping problem
Reconstructing who represented whom two years after closing is hard when the relationship formed by conduct rather than signature. Firms that keep cooperation and agency records attached to the file can answer the question from the documents rather than from memory.
What to do if offered subagency today
Ask four questions before accepting, and expect the answers to point toward declining.
Questions to ask
Does the state permit subagency, and what disclosure does it require? Does the buyer understand they will have no representation? Does the brokerage’s written policy allow it? Does the errors and omissions policy cover duties owed to a non client principal? A no anywhere in that list ends the discussion.
The disclosure consequence
Accepting subagency means telling the buyer in writing that you represent the seller, before you show them anything. Under the 2024 written agreement requirement you also need a document with the buyer covering the arrangement, so there is no version of this that stays informal.
The alternatives
Represent the buyer, or treat them as an unrepresented customer with the honesty and disclosure duties described in the single agency guide. Both are cleaner than owing loyalty to a party you have never spoken to.
Put the policy in writing once
A single line in the office policy manual stating that the firm neither offers nor accepts subagency settles the question permanently and gives agents something to point at. It costs nothing and removes a decision from the field.
Questions brokers ask
What is subagency in real estate?
An arrangement where a cooperating agent from another brokerage works with the buyer while legally representing the seller. The listing broker extends an offer of subagency through the MLS, the cooperating broker accepts it, and the cooperating agent becomes an agent of the seller with fiduciary duties running to a person they may never speak to. The buyer in that arrangement is a customer, owed honesty and material fact disclosure and nothing more.
Does subagency still exist?
It exists in statute and in some MLS rules, and it is rare in practice. Most MLSs stopped making subagency the default in the early 1990s and moved to an arrangement where cooperating brokers work with buyers as buyer agents. A handful of markets and property types still allow it as an option a listing broker can offer and a cooperating broker can accept, and most brokerages have written policies declining it.
Who does a subagent represent?
The seller. Not the buyer they are driving around, not their own brokerage's interests, and not the transaction. The subagent owes the seller loyalty, confidentiality and disclosure of material facts, which includes disclosing to the seller anything the buyer says about their maximum price or urgency. That is the part buyers found surprising once agency disclosure laws forced it into writing.
Why did subagency decline?
Three forces at once. Sellers found themselves liable for the misrepresentations of cooperating agents they had never met, because a subagent's conduct is imputed to the principal. Buyer agency grew through the 1990s as buyers learned they could have their own representative. And state agency disclosure laws required the arrangement to be explained in writing, at which point few buyers agreed to it and few sellers wanted the exposure.
What is the risk of accepting subagency?
For the cooperating broker, taking on fiduciary duties to a seller they have no relationship with, plus a buyer who often believes the agent works for them. For the seller, vicarious liability for statements made by a licensee in another firm they cannot supervise. For the buyer, no advocate and no confidentiality. Brokerages that decline subagency by written policy avoid all three at once.