A Modest Proposal: Bring Back Subagency

May be shocking, but think about it...

Maybe it’s the news that Nevada legislature failed to get rid of Daylight Savings Time, despite the bill clearing the Assembly. Maybe it’s the heat here which is not made any better by humidity (like 40% but that’s insanely high for the desert), but… I’m in an odd mood.

Mostly, can’t stop some of these super hot takes running through my head. The top one I can’t get rid of, except by talking about it here with you all, is to bring back subagency.

I know some of you just gagged a bit. Calm down. I’m not in any position of power and authority; this is just a suggestion to think about it.

This is a public post, and I’ll open comments to non-subscribers as well.

The Buyer Agency Experiment Has Failed

Let me say right at the outset that I know there are great agents out there who truly work and operate as buyer agents. I know there are some who really do understand what fiduciary duty means and requires of them.

Having said that, even those who know or believe themselves to be excellent fiduciary agents for buyers would have to admit that they are a rare breed. Fact is that we just had the biggest lawsuit and judgment in the history of the industry because of widespread steering by buyer agents, which then set the stage for listing agents to tell their seller clients, “You gotta pay, or else.”

Even in the aftermath of the lawsuit and subsequent settlement, it’s fair to say that far too many agents — including the much boasted REALTORS with their Code of Ethics — behave as if the most important thing in the transaction is how they will get paid. I don’t think I need to go into detail here, since everyone reading this right now understands that not a whole lot has changed since August of 2024. Now the inquiry and the “fight” is over concessions instead of compensation, and numerous agents agree that the “reforms” are no reform at all, but huge steps back for everybody involved.

I wrote a long series on William North, former GC of NAR, and his take on agency. Re-read that in full if you’re interested in digging in. Fact is, none of his recommendations or suggestions have been embraced, and today, I don’t see a path forward where his suggestions would be embraced.

For example, North advocated for single agency at the firm level. He advocated for seeking compensation only from the actual client, or if you’re going to seek compensation from the other guy…

if and only if the nonprincipal and his agent understand and agree in writing that the payment of compensation will not result in the broker’s becoming the agent of the party paying his compensation. [Emphasis added, italics in original]

None of those things are likely to come to pass today.

Truth is, most buyer agents today practice some form of transactional agency without calling it that. Worse, they enter into a fiduciary agency relationship that can only expose them and their brokers to further liability when they inevitably fail to live up to standards that they don’t even understand.

Buyer agency has failed.

Buyer Agency Was Never About Consumers

An important point to make here is that buyer agency is not a hundred years old. It does not stem from the core of the Realtor Movement. There is no reason to treat it as some sort of sacred belief you must have.

Buyer agency in real estate became a thing in the 90s after NAR did a big push to get it into state laws. Why?

Brokers were getting sued by buyers for a variety of issues, claiming subagency as a defense, and then losing. But they were getting sued because the buyers thought that these brokers worked for them, when in fact, they were the seller’s agent via subagency.

So why not just tell the buyers who you really work for?

Well, that makes for an awkward conversation… and it likely leads the buyer to think, “Then why am I talking to you instead of the seller’s agent?”

The solution was to create buyer agency, make the buyer’s agent no longer a subagent of the seller, and to impose the heavy responsibility of agency on buyer agents.

After the fact, NAR and its supporters pivoted to insisting that buyer agency was to protect the buyer in a transaction. We all can understand the PR value of such a pivot, but fact is that protecting the buyer was not the motivation for creating buyer agency.

The Lawsuits Were About Deception or Rank Incompetence

What is important for us to consider is that the lawsuits that led to creating buyer agency were not actually about the high ideals of fiduciary duty. They were about plain and obvious things, like a failure to disclose material conditions of the property, or for actual deception.

There is no court in the world that would tolerate deception and misrepresentation, or even failure to disclose material problems, no matter what the agency relationship. Case after case, the courts all say something along the lines of, “You are a licensed professional and owe a duty to the public to be honest, competent and trustworthy.”

For example, we have Easton v. Strassburger, a 1984 California case. The buyer sued “his” real estate broker for failing to disclose soil issues on a property, which led to a landslide after purchase. The broker knew about “red flags” which should have indicated a problem with the soil, foundation, and so on. The California Court of Appeals held that brokers have a duty to inspect and disclose defects to buyers, even if they’re the seller’s agent. This was a landmark case that became precedent for a number of other cases.

Another major case is Dugan v. Jones, a 1980 Utah case, where the court said:

In this state, it is apparent that the rule of caveat emptor does not apply to those dealing with a licensed real estate agent. Though not occupying a fiduciary relationship with prospective purchasers, a real estate agent hired by the vendor [seller] is expected to be honest, ethical, and competent and is answerable at law for breaches of his or her statutory duty to the public.

In almost all of the cases I reviewed (and believe me, it was not a scholarly exhaustive research, but asking Grok), the flaw was the agent failing to disclose some material defect, misrepresenting (aka, lying about) the property, or displaying such incompetence that the court had to act. Using subagency as a defense in such scenarios won’t work.

BUT, buyer agency doesn’t protect the listing agent—a licensed professional—from breaching his or her statutory duty to the public either. So the creating of buyer agency does not and cannot actually protect the listing agent, and shouldn’t, if he or she engages in the kind of stuff that the lawsuits were about.

Expecting Buyer Agency is Too Much

After spending years and years condemning brokers and agents for not living up to the standards of fiduciary duty that buyer agency demands, I have come to realize that the problem isn’t the agent, but me and others who expect it of them.

For example, my friend Doug Miller, who I like and respect a ton, rails against the industry because of its many failures to uphold fiduciary duty. He is a lawyer, so he knows what fiduciary duty actually entails. But listening to him make his absolutely correct arguments, I think the issue is that he expects this heavy responsibility of people who took a 80 hour licensing class and passed a multiple choice exam.

Agency is a big f’ing deal, y’all. Being a fiduciary is no joke. It is required of a very few professions, almost all of them “learned professions” like law and medicine. There is a strong whiff of noblesse oblige about fiduciary duty where the professional is kind of assumed to be of higher intelligence, higher learning, a sort of semi-noble who does things to help the less educated rather than merely for pecuniary gain.

It is neither required of nor expected of businessmen. Merchants are not required to be fiduciaries of anybody. They are expected to be honest and deal fairly with customers, but no one expects them to put their customer’s interests ahead of their own.

The vast majority of brokers and agents are businesspeople. They’re providing a service to buyers, sellers, landlords and tenants in exchange for money. Most of them are honest, fair dealing, and doing their best but they’re not in the “learned professions” with high ideals. Hell, most of the learned professions with high ideals fail to live up to them. There are greedy doctors who run pill mills. There are scumbag lawyers who care not one whit about justice. Why we would expect fiduciary duty and high ideals of real estate agents is beyond me.

Bring Back Sub-Agency

We as an industry should just admit that the buyer agency experiment has failed and return to our roots, which is subagency. In subagency, the buyer’s broker is a sub-agent of the listing broker, who is the agent of the principal-homeowner.

The entire structure of cooperation and compensation was built on top of subagency. Cooperation meant, “I will hire you to be my subagent, if you bring me a buyer.” Compensation — splitting commissions — made sense since both the primary listing agent and the sub-agent who brought the buyer worked for the seller.

It is clear looking at how brokers and agents are behaving today that they really, really like that model. Fine! Let’s return to it.

Buyer agency in real estate became a thing in the 90s after NAR did a big push to get it into state laws; NAR (or others) can just as easily push for subagency to be restored.

Recall that the impetus behind buyer agency were lawsuits. Recall further that those lawsuits were mostly about failure to disclose, about outright misrepresentation, and about rank incompetence.

In 2025, only three states do not have robust disclosure requirements in their statutes: Alabama, Arkansas, and Mississippi. And even those three require some level of disclosure for certain things (health concerns, flood history, etc.). And the subagent can always be sued for deception or fraud or misrepresentation no matter what the agency relationship.

So the risk to consumers from going back to subagency is significantly smaller in 2025 than it was in 1985.

What’s more, a common problem with subagency was the failure of the “buyer agent” to fully disclose that he or she in fact works for the seller. Well, we have had decades of training on disclosure. And after the NAR settlement, there is even more disclosure required of the agent on the street.

Buyer agents are now required to have a written buyer agency agreement signed. Why would it be so difficult to require them to have a written subagency agreement signed? Seems to me, whether you require that the buyer agent disclose how she is paid, what the amount is, request for seller concessions, etc. or require that the agent disclose that she actually works for the seller as a subagent to the listing agent, you’re going to require disclosure. So what difference does it make whether you require disclosure of buyer agency or subagency?

Benefits of Subagency in 2025

There are real benefits to returning to subagency.

First of all, it brings back real agency without conflict of interest. I fail to see how there can be any conflict of interest when the buyer is working with a seller’s sub-agent, and that fact is disclosed upfront. We buy cars all the time from friendly, knowledgeable, seemingly expert salespeople at dealerships without once confusing who that person actually works for.

If we want our own representative in buying a car, we can go hire someone and pay him out of pocket — as we would our lawyer or accountant. It need not be different in real estate.

Buyer agents can exist, if they are fully aware of what that requires. Some brokers and agents may choose to embrace the higher standard. Let them. That would differentiate them from everyone else, who is a subagent.

Second, because of the push away from subagency and towards buyer agency, more and more states have created “transactional agency” and done away with subagency. The argument appears to be that these neutral, nobody’s-fiduciary transactional agencies reduce conflict, lower liability for brokers, and let agents double-end deals. There is also this odd idea that consumers are no longer confused because transactional agency requires upfront disclosures that the agent is not a fiduciary, is “not on your side” as it were.

Except that removes agency from not just the buyer, but also from the seller. At least under subagency, the seller was represented by a fiduciary; in transactional agency, neither the seller nor the buyer are. How is this a net positive?

The Way Forward

The real way forward is to allow for:

• Listing agent: traditional fiduciary agency to the seller, paid only by the seller.

• Buyer agent: traditional fiduciary agency to the buyer, paid only by the buyer. Any seller concession goes to the buyer, not to the buyer agent.

• Subagent: traditional fiduciary agency to the seller, via the listing agent, paid only by the listing agent via commission split. Subagents may not be paid by the buyer.

• Transactional Agent: non-fiduciary, non-agent, paid however he is paid. A mere facilitator of the deal.

This way, the industry can actually restore the idea of agency to the center with no conflicts of interest. If buyers want real representation, they can hire an agent, pay him out of pocket, and get someone loyal only to them. If both buyer and seller agree to hire a facilitator loyal to neither, who just wants to help the deal along, they can do that. Or the buyer can agree to have the seller’s subagent help him through the deal, with full disclosure upfront, knowing that the subagent actually works for the seller.

And we all can return to how things were done for over a hundred years: seller pays a commission, and the listing broker splits that with the subagent broker. Brokers and agents can once again tell the buyer, “Let me help you! You pay nothing, because the seller pays me!” as long as they also disclose clearly, “And that’s because I really work for the seller, not for you.”

The MLS can have the offer of compensation again, which is a unique value proposition now lost to history. And the offer of cooperation means “I promise to hire you as a subagent” instead of whatever nebulous feel-good lingo that people think stands for some kind of policy. It does not. It’s just empty rhetoric, full of sound and fury, signifying nothing.

Brokers and agent teams can cut out the charade that designated agency means something. They can absolutely double-end deals in-house, because both the listing agent and buyer agent work for the seller, who is their client. In the event that a buyer wants to purchase separate buyer agency, then the broker or team can figure out rules to ensure no conflicts of interest… primarily because the buyer will pay the buyer’s agent out of pocket.

Summary

So let’s summarize briefly.

The industry should abandon the failed experiment of buyer agency and return to subagency, where the buyer’s broker acts as a sub-agent of the listing broker, representing the seller.

Subagency aligns with the original structure of cooperation and commission-splitting, which modern brokers and agents still favor. Legal risks that drove the elimination of subagency are mitigated today by widespread disclosure statutes.

Transactional agency is a step back, because it removes fiduciary duty from both parties. Instead, we should have a system with clear options that are all disclosed upfront to buyers and sellers:

• Listing agent

• Subagent

• Buyer agent

• Transactional facilitator.

This system restores true agency, eliminates conflicts, and revives the seller-paid commission model, restores the core value of the MLS, removes the threat of liability from brokers and agent teams, and gives buyers a far greater choice on what they want.

It is undoubtedly an improvement over the current system, where we all expect too much from buyer agents who are not high-minded learned professionals but hardworking businessmen, who don’t know what their duties are or take shortcuts because the burden is too heavy. We then beat up on them, pass laws and regulations to make life harder for everybody, and pretend like we’re morally superior because we’ve made sacrifices on the altar of fiduciary duty.

We’re only human after all.

-rsh