Who is the principal for whom the real estate broker works?

The broker works for the principal who has signed an agency agreement with the broker's company. If the brokerage agency, ex. Coldwell Banker John Smith, has a listing agreement with the Jones family to sell their home through their salesman, John Doe the brokerage and the agent John Doe represent the Jones family as their principal.

The gray area would be if John Doe gets a phone call from a buyer who wants to be represented by an agent to look at homes and he decides to buy the Jones' listing. Now the brokerage and John Doe represent 2 opposing interests in a transaction, which is called dual agency.

Most agencies and real estate agents disclose this issue up front and offer a designated agency option, but it is confusing for many people not in the business or who are not attorneys.