Glossary of Terms

“Agency” Name given the legal relationship between an “agent” and a “principal.” May also refer to a governmental entity.

 “Agent” A person who is asked, and agrees, to act on another’s behalf.  Often used more generally to refer to anyone who assists others in a real estate sale.

 “Broker” A person licensed by the state to provide professional real estate services to the public.

 “Principal Broker” Person licensed by the state to operate a real estate office and supervise the activities of associated brokers.

 “Closing” The process of winding-up a real estate transaction and transferring ownership.  Usually conducted in “escrow” by an “escrow agent.”

 “Escrow” A system of document transfer in which the documents are held by a neutral third-party until all conditions in a contract are fulfilled.

 “Escrow Agent” A person who acts as the neutral third-party in an “escrow.”

 “Earnest Money Agreement” Term sometimes used to describe the contact or “sale agreement” used in a real estate transaction.

 “Licensee” Any person holding a real estate license.

  “Principal” The person who empowers another to act on their behalf.  In a real estate transaction, the buyer and the seller are the “principals.”

“REALTOR®” A licensed real estate professional who is a member of the National Association of REALTORS® and subscribes to a strict code of ethics requiring fidelity and honesty to clients and customers.