In a traditional real estate transaction, who serves as the principal?

In a traditional real estate transaction, the principal is the client. The principal is the person who appoints an agent to act on their behalf in the transaction. This could be a buyer who is looking to purchase property or a seller who is attempting to sell their property.

The principal has the ultimate authority and makes key decisions regarding the transaction. Their needs and preferences guide the agent’s actions and strategies during the process. While brokers, special agents, and transaction managers may play important roles in the transaction, they are acting on behalf of the client, who retains the foundational authority in the deal. The relationship is fundamentally based on the principal-agent theory, where the principal delegates certain decisions and responsibilities to the agent while still maintaining overall control of the transaction's outcome.