What legal document formally establishes an agency relationship in real estate?

The listing agreement is the legal document that formally establishes an agency relationship in real estate. This agreement is a contract between a property owner and a real estate broker, where the broker is given the authority to represent the owner in the sale or lease of a property. It outlines the terms of the relationship, including the responsibilities of both parties, the duration of the agreement, and any applicable commission structure.

In this context, the listing agreement serves to create a fiduciary relationship, which means that the broker is obligated to act in the best interests of the property owner. This legal framework ensures that both parties have a clear understanding of their rights and obligations, and provides the broker with the authority to market the property, negotiate offers, and use their expertise to facilitate the transaction.

Other options, while important in the real estate process, do not establish an agency relationship. A contract for sale pertains to the actual transaction of selling a property, while a purchase agreement formalizes the sale between a buyer and a seller after negotiations. A disclosure statement is used to inform potential buyers about property conditions but does not create an agency relationship.