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

Which service is generally not considered an operating expense in a real estate brokerage?

1. Legal services

2. Marketing costs

3. Rental income

4. Office supplies

The correct answer is: Rental income

The correct choice is that rental income is generally not considered an operating expense in a real estate brokerage. Operating expenses are the costs associated with running a business, which typically include ongoing expenses essential for day-to-day operations. These encompass legal services, marketing costs, and office supplies, which are necessary for maintaining the brokerage's functions and promoting its services. Rental income, on the other hand, is categorized as revenue rather than an expense. It represents the money generated from leasing properties, which contributes positively to the brokerage's earnings. Since rental income does not reflect the costs incurred to operate the business, it is excluded from the operating expense classification. Understanding the differentiation between income and expenses is crucial in analyzing a brokerage's financial health and operational efficiency.