Agency
Definition and meaning of Agency in real estate.
Agency is a legal relationship created by express agreement or implied actions where one party, the agent, is authorized to represent and act on behalf of another party, the principal, in business transactions with third parties. In real estate, this relationship is typically established between a client and their real estate broker or agent.
In more detail
The agency relationship places strict fiduciary duties on the agent, including loyalty, obedience, disclosure, confidentiality, diligence, and accounting. This means the agent must always act in the best interest of the client rather than their own. The relationship is typically created through a written contract, such as a listing agreement for sellers or a buyer broker agreement for buyers. If an agent violates these duties, they can face legal liability or lose their professional license.
Key facts
| Category | Buying & Selling |
|---|---|
| Fiduciary duties | Includes loyalty, confidentiality, disclosure, and obedience |
| Written agreement | Typically established via listing or buyer broker contracts |
| Parties involved | The principal (client) and the agent (real estate broker) |
A homebuyer signs a buyer agency agreement with a real estate agent, authorizing the agent to search for homes, negotiate offers, and represent them throughout the buying process.
Frequently asked questions
Can a real estate agent represent both the buyer and the seller?
This is known as dual agency, and while it is legal in some states with written consent, it is prohibited in other states due to conflicts of interest.
How is an agency relationship terminated?
Agency can be terminated by mutual agreement, expiration of the contract, completion of the transaction, or by the death or incapacity of either party.
Related terms
Sources & references
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