Principal

In real estate, principal has two common meanings. One is the original sum borrowed on a loan, before interest. The other is a party directly in a deal, such as the buyer, seller, or investor, as opposed to an agent or broker acting for them.

As a loan component, the principal balance decreases over time as payments are made, building equity for the property owner. As a transactional party, the principal bears the financial risk and ultimate decision-making authority, while agents and brokers act in a fiduciary or representative capacity on their behalf.