What is the definition of an agency in real estate terms?

In real estate, the concept of agency refers to a relationship in which one party, known as the agent, has the authority to act on behalf of another party, referred to as the principal. This relationship is established voluntarily, meaning that both parties agree to the terms and conditions under which the agent will operate. The agent is entrusted with certain responsibilities and must act in the best interests of the principal, which includes various duties such as loyalty, disclosure, and accounting.

Understanding that agency is a voluntary personal service relationship is crucial because it establishes the framework within which agents operate in the real estate market. It highlights the importance of mutual consent in creating the agency relationship, distinguishing it from other types of relationships or contracts that may not require such consent or personal connection.

In contrast, an implied contract refers to a situation where the agreement is not formally stated but is understood based on the actions of the parties involved. A unilateral contract involves one party making a promise in exchange for an act by another party, while an executory contract refers to an agreement that has not yet been fully performed. None of these concepts align with the specific definition of agency as a voluntary personal service relationship.