Agency relationships start between real estate brokers and the salespersons (Agent) they have agree to sponsor through an independent contractor agreement or as an employee. Agency also occurs between the broker and the seller or buyer through the listing agreement or the buyer representative agreement.

Agency is a relationship based upon an agreement whereby one person, the agent, is authorized to act under the control of another, the principal. This is the relationship between the owner of the real estate or a purchaser, and the real estate broker. These listings are taken in the name of the broker of record, the salesperson is generally authorized to sign on behalf of the broker.

The purpose of Agency – Agency may be created to perform any act which the principal could lawfully do. Only a few exceptions exist, such as voting, swearing to the truth of documents and testifying in court. A principal can control the agent’s behavior and the end result. The principal is also liable for any wrongs done by the agent acting withing the scope of the agency agreement