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

In a real estate relationship, the term "principal" designates the person who delegates authority to another to act on their behalf. This individual is typically a client or customer who enters into a relationship with an agent or broker for representation in transactions such as buying or selling property. The principal establishes the agent's responsibilities, sets the scope of their authority, and ultimately retains control over the decisions made during the course of the transaction.

Understanding this definition is essential, as it emphasizes the role of the principal in the agency relationship, highlighting their power to authorize actions and decisions that impact their real estate affairs. In contrast, while the other roles mentioned—such as agents, managers, or third parties—play important parts in real estate transactions, they do not embody the primary source of authority that the principal represents in this context.