Principal and Client

A principal is any person involved in a contract, such as a seller, buyer, principal broker, or an owner who has hired an agent as a property manager.

A client is a party who has signed an agreement with an agent, and this agreement creates a fiduciary relationship. A customer uses the services of a real estate licensee but has not signed an agreement with an agent. Even though there is not a fiduciary relationship with the customer, the licensee must act honestly and fairly with the customer.

When you list a property, you are representing the seller. As a licensed real estate professional, it is your duty to make sure that the buyer understands that you represent the seller.

A seller who enters into a listing contract with a brokerage firm is a client of the listing agent’s company, not of the agent themselves. The brokerage firm and the listing agent are required to act on behalf of the seller’s interest.

When a real estate broker enters into a contract with a buyer, the buyer becomes the client and the seller becomes the customer.

A buyer’s broker may be paid by the seller, the buyer, or both. Because of the contractual relationship, the agent is still a buyer’s agent if the seller pays the commission.