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

Which of the following is included in gross income for a real estate business?

1. Legal services

2. Rental payments

3. Sales commissions

4. Appraisal fees

The correct answer is: Sales commissions

In the context of a real estate business, gross income refers to the total revenue generated from various activities before any expenses are deducted. Sales commissions are a significant component of this gross income, as they represent earnings resulting from the sale of properties. When real estate professionals facilitate property transactions, the commissions they earn contribute directly to their gross income. This is distinct from other activities mentioned. While legal services, appraisal fees, and rental payments can contribute to a real estate business’s income, they are categorized differently in financial reporting. Legal services and appraisal fees are typically expensed costs—meaning they may not be part of gross income but rather expenditures that reduce net income. Rental payments could be considered income for property owners but do not apply directly to the gross income of brokerage activities involving sales commissions. Therefore, sales commissions stand out as directly tied to the core revenue-generating activities of a real estate brokerage, making them a fundamental component of gross income.