Agency is the foundation of real estate brokerage. It creates fiduciary obligations that require the agent to prioritize the principal's interests. Agency can be created by agreement, ratification, estoppel, or implication.
A seller signs a listing agreement with a broker, creating an agency relationship. The broker becomes the seller's agent and owes fiduciary duties including loyalty, disclosure, and confidentiality.
Know the THREE parties in agency: Principal (client), Agent (broker), and Third Party (customer). The agent owes fiduciary duties to the principal and fair dealing/honesty to the third party.
Related Terms
Related Concepts
The highest legal obligation of trust and confidence owed by an agent to their principal, requiring the agent to act solely in the principal's best interest.
A situation where a single agent or brokerage represents both the buyer and the seller in the same real estate transaction.
An arrangement where a brokerage assigns separate agents within the firm to represent the buyer and seller in the same transaction, allowing each client to have dedicated representation.
A non-agency relationship where the broker facilitates a real estate transaction without representing either party, owing limited duties of honesty, fairness, and competence to both.
An agency relationship created when a principal's actions or words lead a third party to reasonably believe that an agent has authority, and the principal fails to correct this belief.
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