Who is referred to as the principal in a real estate transaction?

In a real estate transaction, the principal is referred to as the client. The principal is the individual or entity that gives authority to another party (the agent or broker) to act on their behalf in the transaction. This role involves entering into a contractual relationship with the agent or broker, who then represents the principal's interests, whether in buying, selling, or leasing property.

The relationship is characterized by trust, as the agent is expected to act in the best interest of the principal, adhering to fiduciary duties such as loyalty, disclosure, confidentiality, and accounting. The principal is typically the one who compensates the agent or broker for their services in the transaction. This dynamic establishes a vital foundation within the real estate industry, emphasizing the importance of the client's position in the process.