What element is necessary for an agency relationship to exist in real estate?

For an agency relationship to exist in real estate, it is essential to have a written agreement between the parties. This written agreement, often referred to as an agency agreement or listing agreement, clearly outlines the terms of the relationship, including the duties and obligations of both the agent and the client. It provides legal confirmation of the agency relationship and helps ensure that both parties are aware of their rights and responsibilities.

A written contract is significant because it serves as proof of the agreement and can help resolve disputes that might arise later. Without such a document, it can be challenging to demonstrate that an agency relationship exists, as many elements—such as the scope of the agent's authority and the specific services to be provided—are typically detailed in writing.

While verbal confirmation or the presence of legal counsel can play a role in real estate transactions, they do not establish an agency relationship on their own. Likewise, payment of commission is not a requirement for an agency relationship; instead, the relationship is based primarily on the mutual consent of the parties as outlined in the written agreement.