agency

agent

An agent is a person authorized to act on behalf of another person, called the principal, in dealings with third parties. In real estate, the agent is usually the brokerage firm, which owes fiduciary duties to its client, while affiliated salespersons act as subagents or agents of the broker. An agent's authority may be universal, general, or special, and it may be created by express agreement, implication, ratification, or estoppel.

Exam tip: On exams, the broker, not the salesperson, is typically the agent of the client. A listing broker is usually a special agent.
Example: A homeowner signs a listing agreement with XYZ Realty; XYZ becomes the seller's agent and owes the seller loyalty, disclosure, and the other fiduciary duties.

1. A seller knows that the basement flooded last spring, but the damage was repaired and is not visible. The seller and listing agent must:

Answer & explanation

Answer: C. Latent (hidden) defects known to the seller or agent must be disclosed; failing to do so can create liability for both.

Related terms & state variants

agency fiduciary general agent principal special agent

Sources

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Last verified: 2026-10-23