Part 1 (Units 3) Getting Started In Real Estate Brokerage Business Flashcards
A broker should have enough capital to pay start-up costs and operation expenses for at least three months.
a. True
b. False
b. False
Ex. A broker must budget for start-up costs and at least six months of operating expenses.
In the early years of a brokerage firm, renting office space saves capital and provides flexibility to the broker who may have to move to larger quarters as the firm grows.
a. True
b. False
a. True
Ex. Most brokers initially decide to rent their office space, generally this is much less money than a broker needs to purchase a building with the flex ability to grow the brokerage business with the opportunity to move into larger quarters and rent additional office space.
An example of institutional adverting would be an ad that features a house for sale.
a. True
b. False
b. False
Ex. The primary types of brokerage advertising are specific and intitutional. Traditionally, brokerage firms have spent most of their promotional dollars on advertising listings. An ad for a house is specific (product) advertising.
Institutional advertising:
a. describes commercial property for sale.
b. promotes a specific property the firm is offering for sale.
c. tells about the firm, its personnel, and services.
d. is normally used for promoting properties for rent.
c. tells about the firm, its personnel, and services.
A broker in a franchise firm will experience increased operational freedom.
a. True
b. False
b. False
Ex. Whether the broker chooses to affiliate with a franchise or remain independent, the firm that has the most ethical and effective service to its customers prospers most.
while franchises are more expensive for a broker, they offer the broker many advantages, such as referral networks, training, and advertising.
a. True
b. False
a. True Ex. Franchises offer brokers many advantages, such as: - built-in referral networks - formal training programs - national recognition - advertising assistance - maagement and sales training programs - technology benefits
A broker uses accrual - basis accounting. The company earned commissions of $400,000 during the year. At the end of the year, the nonclosed transactions were $75,000. The commissions income for the broker for the year was $325,000.
a. True
b. False
b. False
Ex. Accrual-basis accounting attempts to match a firm’s revenues and expenses. Income is recognized when all parties have accepted a contract. Expenses are booked for the period they benefited. Income is reduced for the period in which the contract falls through, if that happens.
Cash-basis accounting is used by MOST brokerage firms because of its simplicity.
a. True
b. False
b. False
Ex. Depending on the firms size, it’s structure, and how it uses its financial statement determains the accounting method. Most small-business taxpayers use cash-basis method because income is taxable in the year received; expenses are deducted in the year paid. Usually, a firm’s balance sheet shows no accounts receivable or accounts payable.
Assume a broker’s annual expenses including their salary, are $245,000 and they want to make a $50,000 profit. If the broker has six sales associates who are likely to contribute company dollars of $50,000 each, the broker is likely to reach their goal.
a. True
b. False
a. True
Ex. Total transactions needed divided by or (x) average sales per agent indicates number of agents required. ($50,000 x 6 = $300,000)
A sales associate employs an unlicensed personal assistant paid by salary and a licensed persaonal assistant paid by commission. The sales associate may pay both the assistance.
a. True
b. False
b. False
Ex. Unlicensed personal assistant, because they receive salaries and may not be paid commissions, are under the lecensee’s or the employer’s control.
A licensed assistance is classified as an independent contractor under the broker, only brokers can pay them commissions.
In order to qualify for statutory independent contractor status, the sale associate need only have a real estate license.
a. True
b. False
b. False
Ex. The three major requirements a sales associate must meet to qualify for statutory independent contractor status ar as follow:
- The sales associate must hold a real estate license.
- The sales associate’s gross income must be based on productuction rather than on the number of hours worked.
- The sales associate must work based on a written contract that states, among other things, that the sales associate is not considered an employee for federal tax purposes.
A broker must give all independent contractors a Form W-2 no later than January 31 for the previous year.
a. True
b. False
b. False
Ex. For independent contractors, the responsibilities are:
- by January 31, sending Form 1099s to independent contractors (think: sales associates), landlords and persons who provide services (such as attorneys, CPAs, janitors, and so on).
The best source for an orientation course for new sales associates is the policy manual.
a. True
b. False
a. True Ex. Brokers are required by statute to adequately direct, control, and manage sales associates and broker associates in the firm. A robust training program attracts good sales associates, increase production, builds loyalty to the company, and reduces turnover. The broker's training program may be structured to cover five major units as follow: 1. Company policies and procedures 2. Technical skills 3. Listing skills 4. Selling skills 5. Tecnology skills **Broker liability under Chapter 475 Florida Statutes: A broker must direct, control, or manage a broker/sales associate employed by the broker. Failure to do so violates the law, subjecting the broker to fine, suspension, or revocation.
Learning how to get an appointment from a buyer’s phone call is covered in a listing skills class.
a. True
b. False
b. False
Ex. Listing skills - The training program should help sales associates understand the importance of listings, how to prospect for listings, how to prepare listing presentations, how to market listings, how to service listings, know how to present offers to sellers, and get contracts to the closing table.
