What determines whether an agency relationship exists between an agent and a buyer or seller?

An agency relationship is fundamentally based on the mutual agreement and intent of the parties involved to create that relationship, which is why the intent of the parties is the correct answer.

When the buyer or seller clearly expresses their desire for the agent to act on their behalf, with authority to represent their interests, an agency relationship is established. This intent can be expressed verbally or through implied actions, signaling that both parties understand and agree to the roles of agent and principal.

While the other factors, such as payment or a written agreement, can help solidify an agency relationship, they are not strictly necessary for its formation. For instance, an agency can exist even without a formal written contract as long as there is a clear understanding and intent between the parties. Additionally, the actions of the agent can reflect the agency relationship, but they cannot solely establish it without the foundational intent from both parties.