Agency relationship is based on one person representing the best interests of another. A real estate agent is licensed by the state to represent a person in the sale or management of a property. North Carolina State laws, the REALTORS Code of Ethics and a general principle of agency law define the responsibility of the agent.

The type of relationship formed between the agent and the client is a fiduciary relationship. A fiduciary relationship is one based on trust and confidence because of the agent owes the following duties to the client:

• Safeguard and account for any monies handled for you.
• Be loyal and follow reasonable and lawful instructions.
• Act with reasonable skill, care and diligence.
• Disclose to you any information, which might influence your decision to buy or sell.

The courts strictly enforce the agency duties so that the client can rely on the agent putting the client's interest before that of anyone else. The courts also require the real estate agent to be fair and honest in all aspects of the transaction. In short, the agent owes its' allegiance to the client.

The source of compensation does not, in and of itself determine agency. The buyer, seller, or both parties can pay the compensation. However, there must be full disclosure as to who is paying.

In real estate transactions, an agency relationship is formed between the Real Estate Broker and the client. The client generally works with a sales agent who is associated with the Broker. The client may be either a buyer or a seller. To be represented as a buyer or seller, it is required that you put your agreement in writing.