In real estate, what does the term 'agency' refer to?

The term 'agency' in real estate specifically refers to the relationship between a broker and their client. This relationship is foundational in real estate transactions and establishes the responsibilities and obligations that the broker has towards the client, such as loyalty, confidentiality, and full disclosure. Under agency law, the broker must act in the best interest of the client, ensuring that their needs are prioritized during the transaction process.

This relationship can take different forms, such as the seller’s agent or buyer’s agent, each with distinct roles but always rooted in the core principles of agency. It is essential for both real estate professionals and clients to understand this relationship because it governs the interactions and the level of representation that clients can expect in their transactions.

In contrast, the other options focus on related but distinct aspects of real estate. For example, while the governing body of real estate practices refers to regulatory organizations that set and enforce the rules, this concept does not capture the client-agent dynamic as agency does. The agreement between property buyers and sellers pertains to the transaction itself, rather than the nature of the relationship involved in that transaction. Finally, methods of advertising real estate are strategies used to market properties and do not encapsulate the legal and fiduciary responsibilities inherent in the agency relationship.