Texas Real Estate Brokerage Sales Apprentice Education (SAE) Practice Exam

What typically characterizes gross income for a real estate office?

1. Fixed overhead costs

2. All revenues from sales and services

3. Tax deductions from operating expenses

4. Cost of goods sold

The correct answer is: All revenues from sales and services

Gross income for a real estate office is characterized by all revenues generated from sales and services. This includes income from property sales, leasing commissions, management fees, and any other services the real estate office provides. Gross income is an essential measure of a business's financial performance, as it reflects the total revenue before any expenses, taxes, or deductions are accounted for. While fixed overhead costs represent the regular expenses that a business incurs regardless of its sales volume, they do not contribute to the gross income figure. Likewise, tax deductions and the cost of goods sold are related to expenses rather than revenue. Understanding gross income is crucial for real estate professionals to assess the overall profitability and operational efficiency of their brokerage.