Concord-based Re/Max Walden Country, whose five offices include this one in Lincoln, has notified clients and real estate brokers that it is eliminating the practice of subagency as part of its everyday policy.

In another sign that local real estate companies are saying goodbye to longstanding policies, a Concord-based real estate firm has decided to drop subagency – the practice of allowing agents other than the listing broker to represent sellers.

Re/Max Walden Country, with offices in Concord, Acton, Bedford, Lexington and Lincoln, has notified clients and real estate brokers that it is eliminating subagency.

According to information provided by the National Association of Realtors, the concept of subagency began losing popularity in several states in the early 1990s. The practice was banned in New York in 1990, and five years later in Vermont and New Hampshire. Florida and Indiana also rejected subagency in 1998.

While subagency is virtually a thing of the past in some states, in Massachusetts, many agents who take homebuyers to see homes still serve as subagents of the home seller – meaning they work on the seller’s, not the buyer’s, behalf. But as homebuyers are demanding representation and as more agents are completing educational coursework to learn how to serve homebuyers, companies are altering their business models.

In addition, some Bay State real estate brokers are dropping subagency because they say they are concerned about the vicarious liability associated with it. Even though it has been commonplace in Massachusetts, according to some critics, subagency can be risky for home sellers and listing agents because they are held liable for any misrepresentation that a subagent makes about a property. That can be particularly troublesome in cases where a subagent does not know a home or owner well and says something about either that isn’t correct.

Lagging Behind

Re/Max Walden Country’s decision to stop offering subagency follows a similar policy announced in early March by GMAC Real Estate. The company-wide policy has been in effect for the past four months in the 57 offices of Carlson GMAC, Hammond GMAC and Kinlin Grover GMAC Real Estate that operate in eastern Massachusetts and southern New Hampshire.

“This is without question the wave of the immediate future,” said Helen A. Edwards, broker-owner of Re/Max Walden Country.

Some industry observers argue that more companies will follow suit now that the state Legislature has approved a measure supported by the Massachusetts Association of Realtors that is designed to clarify the relationships that agents have with consumers. Under the legislation, home sellers will be required to provide informed written consent to allow subagency to occur as of July 1, 2005. Some in the real estate industry argue that once home sellers truly understand the implications of having so many subagents making representations on their behalf, they’ll opt not to use it.

Chuck Lemire, regional director and executive vice president of Re/Max New England, said he believes the agency legislation is long overdue. “Quite frankly, Massachusetts lags significantly behind other New England states and other states across the country [in defining agency],” said Lemire.

While some companies are just now starting to remove subagency as a consumer option, Re/Max on the River in Newburyport has not offered it in five years.

“We haven’t offered subagency for five years because it takes the liability off the seller and the listing broker,” said Sharon Cronin, broker-owner of Re/Max on the River.

Asked whether a specific case or problem had precipitated the policy, Cronin said, “No, it just made sense at the time. There were a lot of new brokers getting into the business and we didn’t want to be responsible for what they represented,” she said.

Re/Max on the River compensates buyer brokers, as well as non-agents, who bring purchasers to see properties listed by the company. According to Cronin, local real estate brokers were outraged at first by the policy change because they didn’t understand buyer agency.

“Five years ago, there were a lot of companies that didn’t offer buyer agency compensation. They didn’t understand it and they thought that buyers should be paying the buyer-broker’s commission,” she said. “That’s just started to change in the last two years.”

In the case of Re/Max Walden Country, Edwards said she has been studying agency practices since 1993 and has been contemplating a company policy change for a long time. In explaining why she decided to stop accepting subagency, Edwards said, “It’s much more direct and less confusing.”

She continued, “What that means is that people who are showing [a] property now … will be representing the person with whom they are working.”

Edwards emphasized that her company will continue to compensate and cooperate with licensed agents who bring buyers to see properties listed by Re/Max Walden Country, with the understanding that they’re not working as subagents of the seller.

A letter was sent to clients and real estate brokers in June and agents have been discussing the changes with new seller clients since the beginning of the year. Edwards said that agents who work for her company have been repeatedly trained and prepared for the policy shift.

“Our people are very comfortable with this and therefore our clients are,” she said.

While the company is eliminating the blanket offer of subagency, Edwards said the company would make exceptions for seller clients who insist on allowing subagency. But those clients will be properly informed about the pros and cons associated with subagency and they will have to sign a disclosure form.

Aglaia Pikounis may be reached at apikounis@thewarrengroup.com.