Agency is a relationship between a principal (seller or buyer) and an agent (broker) who acts on behalf of the principal in dealing with a third party. Most agency relationships in real estate are created by a written agreement, but a formal document is not required in all states.
These relationships also can be created by the words, actions, or deeds of the parties, and don't require any form of compensation. The agency relationships created between the broker and consumers typically extend to the broker’s sales associates. Learn more about disclosure and representation in this tool kit.