Describe the concept of "agency" in real estate transactions.

The concept of "agency" in real estate transactions refers to a fiduciary relationship where one party, known as the agent, acts on behalf of another party, known as the principal, in various transactions, especially negotiations. This relationship is built upon trust and requires the agent to prioritize the principal's interests above their own.

In real estate, the agent has specific responsibilities that include providing advice, negotiating terms, and facilitating communication during the buying or selling process. The agent's duty extends to ensuring that the principal is fully informed about all aspects of the transaction, which reinforces the protective and supportive nature of the agency relationship.

Foundational principles such as loyalty, confidentiality, and full disclosure are vital in this relationship, ensuring that the agent represents the best interests of the principal throughout the transaction. Recognizing agency is crucial for understanding how real estate professionals operate and provide value to their clients.