Subagency in Real Estate: Definition & How It Works

If you’re getting ready for the real estate exam or want a clearer picture of how different real estate agents operate, it’s essential to understand what a subagency in real estate is. This is a topic that often confuses new agents, buyers, and sellers alike.

This guide explains how a subagency in real estate operates, its role in a real estate purchase, and how understanding it can help avoid conflicts of interest by clarifying each party’s responsibilities.

What is an agency in real estate?

Before exploring subagency in real estate, let’s start with the basics: what is an agency in real estate?
An agency relationship forms when a real estate agent or broker agrees to represent a buyer or seller during a real estate transaction. This relationship includes fiduciary duties like loyalty, confidentiality, and full disclosure. The agent is legally and ethically obligated to act in the best interest of their client.

There are several types of agency relationships, including:

• General agency: where the agent represents the client in a range of matters (e.g., a property manager).
• Express agency: where both parties agree in writing or verbally, clearly outlining their roles.
• Special agency: where the agent is authorized for one specific task only, such as selling a single property. This is the most common type in real estate. Learn more in our special agency in real estate article.

How subagency in real estate works

So, what is a subagency in real estate?

A subagency occurs when an agent or cooperating broker assists a listing broker in finding a prospective buyer for a property without representing the buyer. In this arrangement, the subagent works with the buyer but owes a fiduciary duty to the seller.

What every agent in the subagency chain is helping to transfer is the seller’s bundle of rights, including possession, control, enjoyment, exclusion, and disposition. The subagent’s role is to find a buyer willing to acquire those rights at an acceptable price. But because the subagent represents the seller, they must protect the seller’s interests in the negotiation of those rights, even though the buyer may believe the subagent is working for them.

In other words, the subagent helps with the sale, but their loyalty lies with the seller, not the buyer. The subagent must maintain confidentiality and act to obtain the best price or terms for the seller.

In the subagency chain, the listing agent works under an associate broker or managing broker at the listing brokerage. The subagent works under a different broker at the cooperating brokerage. Both brokers, and both agents, technically represent the seller. If the subagent misrepresents a property or fails to disclose a defect, the liability can travel up the chain: subagent to cooperating broker to listing broker to seller. This is one reason subagency has fallen out of favor: too many parties share the risk.

Subagent vs. buyer’s agent

Topic	Subagent	Buyer’s agent
Who they work with	The buyer	The buyer
Who they represent	The seller	The buyer
Main fiduciary duty	Protect the seller’s interests	Protect the buyer’s interests
Buyer advocacy	Limited; the buyer is usually a customer	Full advocacy within the agency agreement
Exam takeaway	Works with the buyer, but works for the seller	Works with the buyer and works for the buyer

A real-world subagency real estate example

Let’s say you’re a homebuyer, and you contact the listing agent to schedule a showing. That listing agent can’t represent both sides without written consent. If you don’t sign an agreement to work with that agent as a buyer’s agent, they, or any cooperating agent, could act as a subagent of the seller.

In this case, any advice they offer you must still serve the seller’s interests.

Subagency real estate example: You, as a buyer, walk into an open house, and the agent shows you around. You like the house, ask for advice, and they seem helpful, but they’re technically a subagent representing the seller, not you. Utah specifically abolished presumed subagency. Before its reforms, a cooperating agent could automatically become a subagent of the seller unless a buyer agency agreement existed.

Now Utah requires agency disclosure before a binding purchase or lease agreement, and the free Utah real estate practice exam tests exactly this transition from presumed subagency to mandatory disclosure. Kansas’s rural market makes this open house scenario especially common. Buyers frequently walk into listings without representation in small-town markets, making the subagent-versus-buyer-agent distinction a practical daily issue. The free Kansas real estate practice exam covers Kansas agency disclosure requirements and subagency obligations under the Kansas Brokers’ and Salespersons’ License Act.

Consider a practical example: a subagent shows a buyer a property in a deed-restricted community. The HOA has deed restrictions that prohibit short-term rentals, but the buyer plans to use the property as an Airbnb. Does the subagent have a duty to disclose the rental restriction? Yes. Deed restrictions are material facts that must be disclosed to any buyer, regardless of the agency relationship. But does the subagent have a duty to ask the buyer about their investment plans and proactively flag potential conflicts? No. That is a buyer’s agent duty, not a subagent duty.

Risks of a subagency relationship for real estate agents and buyers

There are several concerns with a subagency relationship in real estate:

• Lack of representation for the buyer, who may not realize the agent isn’t working in their interest.
• Potential liability for both the listing broker and the subagent if the buyer feels misled.
• Conflicts of interest, especially if the buyer discloses budget or other confidential information.

The biggest risk for buyers in a subagency arrangement involves material facts. While the subagent must disclose known defects and property issues to the buyer, their fiduciary loyalty belongs to the seller. This creates a gray area: the subagent cannot actively conceal material facts, but they also have no obligation to advocate for the buyer or volunteer information that would weaken the seller’s negotiating position. The exam tests this distinction repeatedly. A subagent must disclose defects, but they do not owe the buyer the same level of advice and advocacy that a buyer’s agent would.

For these reasons, subagency is far less common today. Many real estate markets now encourage exclusive agreements to ensure that each party is represented accurately.

Is subagency still common?

While subagency still exists in some states, many regions have transitioned to buyer agency models. This shift protects both buyers and sellers by establishing clearer relationships and responsibilities.

Some states require full disclosure and written consent when subagency is used. As always, practices vary by state, so it’s essential to know what’s legal and standard in your state of licensure.

Historically, listing a property in the MLS often created subagency between the listing broker and cooperating brokers. In the 1990s, buyer agency became more common, and MLS practices shifted away from automatic subagency. Some markets used options such as Multiple Listing Plus to cooperate through the MLS without automatically making every cooperating broker a subagent of the seller.

Some states have moved even further away from traditional subagency. Florida, for example, uses transaction broker, single agent, and no brokerage relationship models instead of a traditional dual-agency or subagency default. Colorado also presumes transaction brokerage unless a written single-agency relationship is created. For exam purposes, the key is to follow your state rule, not just the national definition.

Why This Topic Matters for Real Estate Agents

If you’re studying for your license, understanding what a subagency in real estate is, and how it differs from general agency, express agency, or special agency, can help you avoid mistakes and serve your clients better.

Even in a subagency arrangement, fair housing obligations apply to every agent in the chain. A subagent cannot engage in steering, meaning directing buyers toward or away from neighborhoods based on race, religion, or other protected characteristics, regardless of the seller’s preferences. If a seller instructs their listing broker to have subagents avoid showing the property to certain groups, every agent in the chain must refuse. Fair housing law overrides all agency obligations, including the fiduciary duty of obedience to the client.

It’s also a key part of many real estate licensing exams. Questions often test your understanding of:

• How agency relationships are formed
• Who owes duties to whom
• The implications of working without an agreement. Tennessee is a good example: the state uses the unique title affiliate broker instead of salesperson. Tennessee requires oral disclosure of agency status before real estate services are provided and written confirmation with an unrepresented buyer before preparing an offer. Nevada requires licensees to provide a written Duties Owed disclosure under NRS 645.252, and failing to disclose agency status can create a licensing issue. The Nevada real estate salesperson exam covers these agency disclosure obligations in detail.

Subagency real estate exam FAQs

In a subagency arrangement, who is the subagent of the seller?

The subagent is usually the cooperating agent or cooperating broker who brings a buyer to another broker’s listing but does not represent the buyer. In a subagency arrangement, that cooperating agent owes fiduciary duties to the seller, not to the buyer.

Which of the following is an example of subagency?

A common example is a salesperson from a different brokerage who brings a buyer to a listing and owes fiduciary duties to the seller. The cooperating agent acts as a subagent of the listing broker, not as the buyer’s representative.

A subagency occurs when what happens?

A subagency occurs when a cooperating broker or agent assists in selling a property listed by another broker but owes fiduciary duties to the seller rather than the buyer. The simplest exam phrase is this: the subagent works with the buyer, but works for the seller.

How to Learn More with Lexawise

At Lexawise, we recognize that agency relationships can be one of the most challenging topics on the exam. That’s why our real estate exam prep includes easy-to-understand breakdowns of terms like subagency, express agency, and general agency, and Lexawise covers all 50 states.

Instead of memorizing the word subagency alone, study the pattern behind it: who hired the licensee, who receives fiduciary duties, and what must be disclosed to the other party. That is the kind of reasoning exam questions use when they describe an open house, a cooperating broker, or a buyer who has not signed an agency agreement.

If this topic is one of your weak areas, practice agency questions until you can identify the client in every scenario. Once you can answer that, the duties usually become much easier to recognize.

Summing-up

Understanding what a subagency in real estate is goes beyond passing the test; it’s about becoming a responsible, ethical agent. Whether you’re preparing for your state exam or working with your first client, understanding who you represent and the duties you owe is crucial.