Part 3 Flashcards
Why should goals be modified annually in a brokerage business plan?
A. Because real estate laws change yearly
B. To reflect market conditions and track business progress
C. To satisfy continuing education requirements
D. Because clients expect yearly updates
B
Which of the following best describes the role of written goals in a brokerage business plan?
A. They guarantee financial success if followed exactly
B. They are motivational tools used mainly by new agents
C. They provide measurable direction and place the broker in control
D. They serve as informal guidelines and are rarely modified
C
According to the course, what is the relationship between strategic planning and goal writing?
A. Goal writing begins after client interviews are completed
B. Strategic planning is based on goals already written
C. Strategic planning starts with key questions that lead to goal writing
D. Goal writing is unrelated to strategic planning
C
Which of the following statements best reflects the purpose of writing long-term goals in a brokerage business plan?
A. To track short-term office performance and close more deals
B. To create a financial strategy for the current market
C. To provide a vision of long-term self-fulfillment and life goals
D. To prepare a daily task list for all sales agents
C
Once your brokerage business stabilizes, which type of budget should you create to manage daily operations?
A. Investment budget
B. Licensing fee schedule
C. Operating budget
D. Long-term growth budget
c
Why do start-up brokerages typically focus on doing business in their immediate area?
A. They are legally restricted to their zip code
B. They rely on personal referrals from past clients
C. They usually lack the funds to advertise beyond their location
D. Local markets are more profitable than regional markets
C
Which of the following is most typical of a small-scale brokerage start-up?
A. A team of agents working under the broker
B. A franchise agreement with a national brand
C. A single broker operating the business alone
D. Multiple investment partners and shareholders
C
Which of the following best reflects the purpose of the detailed questions a small-scale start-up must consider before launching?
A. To meet mandatory state filing requirements for new brokerages
B. To develop a complete and realistic plan covering financial, structural, and operational factors
C. To compare pricing structures with competitors in the area
D. To assess licensing reciprocity across multiple states
B
Which of the following is NOT mentioned as a question to ask when considering purchasing an existing brokerage?
A. What assets are being sold?
B. What is the company’s business structure?
C. How many agents are licensed in the state?
D. What percentage of sales agents might leave with a change in ownership?
C
What is the most strategic benefit of establishing rapport with a competing broker, even if they show no interest in selling their brokerage?
A. It allows for shared marketing opportunities
B. It creates a foundation for future acquisition discussions
C. It gives legal access to their client database
D. It allows for agent poaching without conflict
B
According to the course, how should a broker view competition in the local real estate market?
A. As a threat to their listing pipeline
B. As an unavoidable obstacle to market dominance
C. As a negative force that must be minimized
D. As a healthy driver of innovation and community growth
D
Which of the following is required for a broker to legally operate a sole proprietorship under a business name in Texas?
A. File articles of incorporation with the Secretary of State
B. Register a DBA with the County Clerk and file it with TREC
C. Obtain a federal business operations certificate
D. Submit quarterly business activity reports to TREC
B
What is a key feature of a sole proprietorship in Texas real estate brokerage?
A. It requires monthly tax reporting to TREC
B. It cannot operate with more than three license holders
C. It does not require state compliance filing, but does require an active broker’s license and DBA registration
D. It can only be used by brokers who are members of a national franchise
C
- Under TREC rules, when is an entity required to maintain $1 million in E&O insurance coverage?
A. When the entity is registered as a sole proprietorship
B. When the designated broker owns 10% or more of the entity
C. When the designated broker owns less than 10% of the entity
D. When the business is formed outside of Texas
C
- Under TREC rules, when is an entity required to maintain $1 million in E&O insurance coverage?
A. When the entity is registered as a sole proprietorship
B. When the designated broker owns 10% or more of the entity
C. When the designated broker owns less than 10% of the entity
D. When the business is formed outside of Texas
C
Which of the following would NOT be considered acceptable proof of ownership for a business entity applying with TREC?
A. Company meeting minutes listing ownership percentages
B. Articles of Incorporation showing ownership details
C. Personal bank statements showing business income deposits
D. IRS Schedule K-1 or Schedule C
C
Which of the following statements is TRUE regarding the application process for a real estate business entity under TREC rules?
A. A corporation can apply without a broker, as long as it hires licensed agents.
B. If the designated broker owns at least 10% of the entity, no proof of ownership is required.
C. If the designated broker owns less than 10%, the entity must submit proof of a $1 million E&O insurance policy.
D. LLCs are exempt from ownership verification requirements.
C
A business entity will not qualify for a Texas broker license if:
A. The entity operates in multiple states but is not registered in Texas.
B. It has had more than one designated broker in the last year.
C. It is a corporation instead of an LLC.
D. Its broker only holds a salesperson license.
A
In a general partnership, what is true about the authority of each partner?
A. Only one partner can sign binding agreements for the partnership.
B. All partners must co-sign any binding agreement.
C. Each partner can independently bind the partnership to agreements.
D. Partners must have a formal vote to authorize contracts.
C
What is a key requirement for forming a real estate LLC in Texas where the liability and income remain separate among members?
A. At least one member must be a licensed broker.
B. Each member must have a broker’s license.
C. The LLC must include a managing broker.
D. The LLC must have a signed income-sharing agreement.
B
. If one member of a broker-only LLC is sued for violating real estate law, what is the liability of the other members?
A. All members are equally liable due to shared ownership.
B. The LLC absorbs the liability equally.
C. Only the individual broker who violated the law is liable.
D. Liability depends on whether the other members voted for the action.
C
Which statement is true about shareholder liability in a corporate real estate brokerage?
A. Shareholders are never liable beyond their investment.
B. Shareholders are equally liable for all corporate actions.
C. Shareholders may be liable if the corporate charter is broken by court order.
D. Shareholders must carry personal insurance to avoid liability.
C
Why might a court decide to “break” a corporation’s legal protection and hold the owners personally liable?
A. If the corporation has fewer than three shareholders
B. If the corporation is dissolved due to inactivity
C. If the owners use the corporation to avoid liability and act negligently or illegally
D. If the corporation generates over $500,000 in revenue without paying dividends
C
Which business structure allows multiple brokers to share office space and expenses while keeping income and liability separate—but only if each member holds an active broker’s license?
A. General partnership
B. Limited partnership
C. Sole proprietorship
D. Limited Liability Company (LLC)
D
Which business structure has the lowest setup cost and simplest process in Texas?
A. Corporation
B. Limited Liability Company (LLC)
C. Sole Proprietorship
D. Limited Partnership
C
n which of the following cases could a corporation be at risk of being dissolved by the state?
A. The sole owner chooses not to hire employees.
B. The business fails to file required declarations or corporate documents.
C. The corporation does not reach a profit margin in its first year.
D. The designated broker sells their shares but continues as an officer.
B
