Key Takeaways
- Seller subagency was once the default in NC but is now rarely used due to liability concerns
- MLS offers of cooperation typically create buyer agency or no agency relationship
- A cooperating broker working with a buyer client does not become a subagent of the seller
- Commission payment does not determine agency relationship - agency is determined by agreement
- Brokers must clarify their agency relationship before negotiating or presenting offers
Seller Subagency and Cooperation
Understanding the historical context and current practice of broker cooperation is important for North Carolina real estate transactions.
Historical Context: Seller Subagency
Historically, all brokers in a transaction were presumed to be subagents of the seller:
Traditional Model (Outdated)
- Listing broker was seller's agent
- Cooperating brokers were seller's subagents
- Buyers had NO representation
- All brokers owed duties to seller only
This model created significant problems because buyers believed the "showing agent" was helping them.
Modern Practice
Today in North Carolina:
- Buyer agency is common and expected
- Seller subagency is rarely used
- Brokers must disclose WHO they represent
- Written agreements define relationships
MLS Cooperation
When properties are listed in the MLS, the listing broker makes an offer of cooperation:
What Cooperation Means
| Aspect | Description |
|---|---|
| Commission sharing | Listing broker offers commission split |
| Property access | Cooperating brokers can show the property |
| Agency relationship | NOT determined by cooperation offer |
| Representation | Cooperating broker represents their client (buyer) |
Key Point: Accepting a commission split from the listing broker does NOT make you a subagent of the seller.
Agency and Compensation
Commission Does NOT Determine Agency
A common misconception is that whoever pays the commission determines the agency relationship. This is FALSE:
| Scenario | Agency Relationship |
|---|---|
| Buyer broker paid by listing broker | Still buyer's agent |
| Seller pays both commissions | Each agent serves their client |
| Buyer pays own broker directly | Buyer's agent |
How Agency IS Determined
Agency in North Carolina is determined by:
- Written agreement between broker and client
- NOT by compensation source
- NOT by MLS cooperation offers
Cooperating Broker Responsibilities
When working as a cooperating broker with a buyer:
Duties to Your Buyer Client
- Full fiduciary duties (if buyer agency agreement exists)
- Disclosure of material facts
- Negotiation on buyer's behalf
- Confidentiality of buyer's information
Duties to Seller (As Customer)
- Honesty and fair dealing
- Disclosure of material facts about property
- Professional conduct
Important Disclosures
Before presenting an offer, cooperating broker must:
- Confirm agency status with seller's agent
- Disclose representation to all parties
- Clarify who represents whom
Subagency Today
Seller subagency is still possible but rare:
| When Subagency Might Occur | Explanation |
|---|---|
| Broker chooses subagency | Must be disclosed to buyer |
| No buyer agreement exists | Broker might be seller subagent |
| Older listings | May still offer subagency |
Exam Tip: If a question mentions subagency, remember the subagent owes duties to the SELLER, not the buyer they're working with.
If a cooperating broker is paid from the listing broker's commission, who does the cooperating broker represent?
What was the main problem with the traditional seller subagency model?