Final answer:
To establish agency, a broker must establish a written fiduciary relationship with a prospective client. This creates a legal agency relationship and defines the responsibilities of both parties. (Option B).
Step-by-step explanation:
In order to establish agency, the correct answer is B: Establish a written fiduciary relationship with a prospective client. Agency in a real estate context is created when a principal (the client) delegates to an agent (such as a broker) the right to act on their behalf and to make binding decisions concerning real estate transactions.
Establishing a written agreement is crucial because it clearly defines the duties, rights, and responsibilities of both the principal and the agent, thus creating a fiduciary relationship where the agent owes specific duties to the principal, such as loyalty, confidentiality, and care.
While an oral agreement may create an agency relationship in some cases or jurisdictions, it is not considered best practice, and certain types of agency relationships, such as those that involve the sale of real estate, typically must be in writing according to the statute of frauds in many jurisdictions.
Therefore, a written agreement is generally required to ensure compliance with the law and to provide a clear record of the terms of the agency relationship.