GCAAR Q&A: What is a “sub-agent” in regard to Broker giving commission?

GCAAR Legal Q&AQUESTION:  What is a “sub-agent” in regard to Broker giving commission?  Is a subagent a licensed agent?  If not, is it best to NOT agree to pay a subagent, and have the payment only go to a licensed agent?

Answer:  Subagency refers to the relationship between the listing broker/agent and another broker/ agent who brings the buyer to purchase the property.  In subagency, the agent bringing the buyer is actually working for the seller as a subagent of the listing broker. This is important, as the agent working with the buyer actually owes fiduciary duties to the seller, not the buyer. Subagency occurs when the agent does not have a buyer-broker agreement in place with the buyer.  

So while a subagent is licensed, the question of whether to pay a subagent is a good one.  The problem with subagency is the fact that the listing broker/agent and their seller clients are held responsible for the actions, errors and omissions of the subagent.  Does the seller want a third party, who they likely do not know, representing them?  It’s a discussion you should have with the Seller.  The reason to pay a subagent is so you do not eliminate anyone from showing the property.