What type of agency allows a broker to act on behalf of a principal?

The correct answer, express agency, is a formal relationship established through a written agreement or verbal consent, where a broker is explicitly authorized to act on behalf of a principal in real estate transactions. In express agency, the terms of the agent’s authority are clearly defined, allowing the broker to represent the principal’s interests in negotiations, decision-making, and other activities involved in the transaction.

This type of agency is particularly important in the real estate industry, as it defines the scope of the broker's powers and obligations to the client. The express nature of this relationship helps to prevent misunderstandings and ensures that both parties are aware of their rights and responsibilities.

Other types of agency, like implied agency, generally arise from the actions or behaviors of the parties involved rather than any explicit agreement and may not provide the same level of clarity regarding authority. General agency pertains more to situations where an agent is authorized to act in a variety of matters on behalf of a principal rather than a specific real estate transaction. The term offset agency is not recognized in real estate practice, which further clarifies that express agency is the most appropriate answer here.