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

Which of the following is considered operating expenses in real estate brokerage?

1. Commissions on in-house sales

2. Appraisal Fees

3. Marketing costs

4. Net Operating Income

The correct answer is: Marketing costs

Operating expenses in real estate brokerage refer to the ongoing costs associated with running a brokerage firm. Marketing costs are indeed classified as operating expenses because they are necessary for promoting properties and securing clients. Regular marketing efforts include advertising listings, creating promotional materials, and leveraging social media to attract potential buyers and sellers. These expenses are essential for maintaining visibility in a competitive market and directly contribute to the brokerage’s ability to generate sales and revenue. In contrast, commissions on in-house sales are typically considered a cost of sales rather than an operating expense. They represent a direct payout related to transactions rather than a recurring expense related to operations. Appraisal fees, while part of the transaction costs that may arise in specific deals, are not regular operating expenses for the brokerage. Net Operating Income, on the other hand, is a measure of profitability and is not classified as an operating expense; instead, it represents total income minus operating expenses. Hence, marketing costs correctly align with the definition of operating expenses in real estate brokerage.