Final answer:
In a real estate transaction, the customer is the principal, which is the party being represented. The role of escrow in real estate is to secure funds and manage payments for home insurance and property taxes as part of the mortgage payment.
Step-by-step explanation:
In a real estate transaction, the customer is considered the principal. This term refers to the party whose interests are being represented in the transaction, typically the buyer or the seller of the property. The broker or agent works on behalf of the principal to facilitate the sale, while the third party, such as an escrow service, may handle the transfer of funds and documents to ensure a fair and secure transaction.
Speaking of escrow, it is an arrangement where a neutral third party holds onto funds during the transaction process. Once everything is in order for the home purchase, the escrow service can also manage payments for items like home insurance and property taxes, which can be conveniently included in the monthly mortgage payment.