What is the definition of "agency" in the context of real estate?

The correct definition of "agency" in the context of real estate is a legal relationship between an agent and a principal. This relationship is foundational in real estate transactions, as it establishes the rights and responsibilities of both parties involved. The agent acts on behalf of the principal, who is typically the client seeking to buy, sell, or lease property. This relationship is governed by fiduciary duties, which require the agent to act in the best interests of the principal, ensuring loyalty, confidentiality, and full disclosure.

Understanding this relationship is critical for anyone working in real estate, as it influences how agents represent their clients and the obligations they have to them during transactions. Additionally, it helps clarify the legal implications and responsibilities that come with representing someone else's interests in a real estate deal.