In real estate transactions, who is referred to as the principal?

In real estate transactions, the term "principal" specifically refers to the party in the transaction who is represented by an agent. This party is typically the buyer or seller of a property. The principal relies on the agent to provide expert guidance, negotiate on their behalf, and facilitate the transaction. This relationship is foundational in real estate, as it establishes the authority of the agent to act in the principal's best interests.

The other options do not accurately capture the definition of a principal in this context. While an agent plays a crucial role by representing the principal, they are not the principal themselves. Similarly, financial institutions and government authorities have distinct roles that do not align with the definition of a principal in real estate transactions. Thus, understanding that the principal is the party being represented is essential in grasping the dynamics of real estate relationships.