A realty firm representing a home builder has sold several homes. Who does the firm have an agency relationship with?

The realty firm has an agency relationship with the home builder because the firm is acting on behalf of the builder in the sale of the homes. In real estate, an agency relationship is established when one party (the agent) is authorized to act on behalf of another party (the principal). In this scenario, the home builder is the principal who has engaged the firm to represent them in marketing and selling the properties.

This relationship typically involves the firm working to promote the builder's interests, showcasing the homes, negotiating sales, and handling transactions in a manner that aligns with the builder's objectives. The firm’s role is primarily to represent and advocate for the builder, thus solidifying the agency relationship in that context.

While the firm interacts with the buyers, their primary allegiance and contractual obligations are to the home builder. The other parties listed do not create an agency relationship with the firm in this scenario, as the local government pertains to regulations, and financing institutions are involved in transactions but do not establish an agency relationship with the realty firm on behalf of the builder.