Agency
A legal relationship where one party (the agent) is authorized to act on behalf of another party (the principal) in real estate transactions. This relationship creates fiduciary duties including loyalty, confidentiality, disclosure, obedience, reasonable care, and accounting.
Example
“The buyer's agency relationship with the realtor required full disclosure of any potential conflicts of interest.”
Memory Tip
Remember 'agent-cy' - it's the relationship that gives an agent the power to act for you.
Why It Matters
Understanding agency relationships helps buyers and sellers know whose interests their real estate professional represents and what level of advocacy they can expect.
Common Misconception
Many people assume all real estate agents automatically work for the buyer, when in fact the agent's loyalty depends on the specific agency agreement established.
In Practice
When you hire a buyer's agent, they have a fiduciary duty to negotiate the best terms for you, but a listing agent working with you as a customer owes their primary loyalty to the seller.
Etymology
Derived from the Latin 'agere' meaning 'to do' or 'to act,' representing the concept of one person acting for another.
Common Misspellings
Compare today's mortgage rates
More in real estate
Other real estate terms you should know
Need financial definitions?
Clear definitions for 2,500+ finance, insurance, and investing terms.