Who is considered the principal in a real estate agency relationship?

In a real estate agency relationship, the principal is identified as the person who hires the agent to act on their behalf. This represents the foundational basis of agency law, where the principal provides authority to the agent to act in their best interests in transactions. This relationship forms the core of fiduciary responsibilities, meaning the agent must prioritize the principal's interests, maintain confidentiality, and provide loyalty.

When a person engages an agent — whether for purchasing, selling, renting, or any other real estate activity — they are establishing themselves as the principal. The agent then operates under that authority, navigating the market and representing the principal's interests throughout the transaction process. In contrast, other options might refer to individuals involved in the transaction but do not define the agency relationship in the same way as the individual who hires the agent.

Overall, understanding the role of the principal is crucial in grasping the agency dynamics in real estate, highlighting the importance of the fiduciary relationship and the responsibilities that come with it.