Which statement identifies the principal in an agency relationship?

• A. The one who hires the agent to represent the parties' interest
• B. The agent
• C. The customer
• D. The broker

Answer: (A)

In agency relationships, the principal is the person who authorizes the agent to act on their behalf and to pursue their interests. In real estate, that means the party who hires the agent to represent them—typically the seller or the buyer as the client. The agent is the licensed professional who carries out duties for the principal, guided by fiduciary responsibilities such as loyalty and confidentiality. The customer is someone who receives information but isn’t in a formal agency relationship. The broker is the firm or individual who may employ the agent to facilitate the transaction, but isn’t automatically the principal. So the best statement is the one that identifiers the principal as the party who hires the agent to represent their interests.