Understanding Subagency in Texas Real Estate: Who Really Works for Whom?

SubagencyIn the intricate world of real estate transactions, it's crucial for both buyers and sellers to comprehend the concept of subagency in Texas, particularly when dealing with buyers and buyer’s agents.

One of the most important reasons for a buyer to be working with a buyer's agent under a written buyer's representation agreement has to do with subagency and to whom the agent's loyalties are directed.

In the Lone Star State, subagency is alive and well. The dynamics of agency relationships play a significant role in shaping the real estate process. Let's delve into the intricacies of subagency and why all real estate agents are initially aligned with the seller, only shifting loyalty upon the buyer signing a buyer's representation agreement.

Subagency in Texas Real Estate

Subagency in Texas occurs when a cooperating (co-op) agent (an agent from a brokerage separate from the listing brokerage) who is not representing the buyer in an agency relationship shows property to a buyer. In this situation, the buyer is a customer of the co-op agent and the co-op agent owes their fiduciary responsibilities to the Seller and could not say nor do anything that would be detrimental to the seller. Essentially, the buyer's agent becomes a subagent of the listing agent, sharing fiduciary duties with the seller.

All Agents Initially Work for the Seller

In Texas, the default relationship between real estate agents and their clients is one of subagency, unless a different arrangement is established. When a buyer starts working with a real estate agent but hasn't signed a buyer's representation agreement, the agent is automatically a subagent of the seller. This means that the agent owes primary loyalty and fiduciary duties to the seller, even if they are helping the buyer find a suitable property.

Buyer Representation Agreement Shifts Loyalty

The pivotal moment in the agency relationship occurs when the buyer signs a buyer's representation agreement with a designated buyer's agent. This legally binding contract establishes an agency relationship between the buyer and the buyer's agent, with the agent owing fiduciary duties exclusively to the buyer. This agreement marks a shift in loyalty and ensures that the agent is working in the best interests of the buyer throughout the real estate transaction.

Benefits of Buyer's Representation

Signing a buyer's representation agreement offers numerous advantages to homebuyers. The buyer can expect undivided loyalty, confidentiality, and advocacy from their agent. The agent becomes a trusted advisor, committed to negotiating the best terms and conditions on behalf of the buyer.  Of all of the advantages, one major one is confidentiality.  With a buyer representation agreement, the buyer can confidently know that the agent is working for them and keeping their best interests at heart.

In the realm of Texas real estate, understanding subagency is vital for both buyers and sellers. All real estate agents initially work for the seller, but this dynamic changes once the buyer signs a buyer's representation agreement. Buyers are encouraged to establish this relationship early in the process to ensure that their interests are fully protected. By grasping the nuances of agency relationships, individuals can navigate the real estate market with confidence, knowing that they have a dedicated advocate by their side.

If you have any particular questions, I am always happy to speak with you about them.  Just use the contact form below and let's talk.  If this seems like something you do not need to worry about -- think again!  I am sharing this because I feel as a buyer, you need to know more about it to have a more pleasant experience and a successful transaction.

Disclaimer:  I am not an attorney and my opinions should not be considered legal advice.  Any discussion regarding this topic in the comments does not create a client-agent relationship.  If you are needing legal advice, please contact a competent real estate attorney.

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