Real Estate Salesperson Licensing Exam Real Estate Practice, Brokerage Operations, and Math Syllabus

Real Estate Practice, Brokerage Operations, and Math syllabus — full chapter and topic list

Expand any chapter to see its topics and sub-topics. This is the whole examinable outline for Real Estate Practice, Brokerage Operations, and Math in Real Estate Salesperson Licensing Exam, not a summary of it.

1. 1

   Brokerage Management and Supervision

   3 topics

   • Broker-Salesperson Relationship
     • Employee vs. independent contractor status
     • Broker's duty to supervise affiliated licensees
   • Trust (Escrow) Account Management
     • Commingling and conversion prohibitions
     • Handling of earnest money and record retention
   • Advertising and Marketing Compliance
     • Truthful advertising and team/franchise disclosure
     • Do Not Call Registry and CAN-SPAM
2. 2

   Property Management

   3 topics

   • Management Agreements and the Property Manager's Role
   • Landlord-Tenant Relationships
     • Security deposits and habitability
     • Eviction (unlawful detainer) and constructive eviction
   • Operations and Risk Management
     • Budgeting, maintenance, and tenant selection
     • Insurance and liability
3. 3

   Real Estate Mathematics

   5 topics

   • Area, Volume, and Measurement
     • Square footage and acreage calculations
   • Commission and Percentage Problems
     • Splits, net-to-seller, and rate calculations
   • Financing and Investment Math
     • Interest, loan amounts, and amortization
     • Capitalization rate, cash flow, and ROI
     • Discount points and equity
   • Proration, Transfer Tax, and Closing Math
   • Appraisal and Assessment Math
     • Property tax (mill rate and assessed value) calculations
     • Depreciation and gross multipliers
4. 4

   Real Estate Investment and Taxation

   3 topics

   • Investment Analysis Fundamentals
     • Leverage, appreciation, and cash flow
     • Equity buildup and tax shelter benefits
   • Federal Income Tax Considerations
     • Capital gains and the primary residence exclusion (Section 121)
     • Depreciation deductions and basis
     • 1031 like-kind (tax-deferred) exchanges
   • Property Taxation
     • Ad valorem taxes and special assessments
     • Tax liens and exemptions

Real Estate Practice, Brokerage Operations, and Math flashcards for Real Estate Salesperson Licensing Exam

21 of 60 cards from the Real Estate Practice, Brokerage Operations, and Math deck — real questions with worked answers.

1. In a real estate brokerage, who holds the license that a salesperson works under, and who is the salesperson's agency relationship with the client legally established through?

   The salesperson works under a sponsoring/employing broker. The agency relationship with the client is legally created with the BROKER; the salesperson acts as the broker's agent (a sub-agent of the broker).

2. What is the difference between an independent contractor and an employee classification for a real estate salesperson under a broker?

   An independent contractor controls how work is done (paid by commission, no tax withholding, signs an IC agreement). An employee has hours/methods directed by the broker, who withholds taxes and may provide benefits. Most salespersons are independent contractors but the broker still supervises licensed activity.

3. Can a real estate salesperson accept a commission or compensation directly from a buyer, seller, or another broker?

   No. A salesperson may only be paid by their sponsoring broker. Accepting compensation directly from anyone else (a client, customer, or another broker) is generally prohibited.

4. What does a broker's duty to supervise require regarding the actions of affiliated salespersons?

   The broker is responsible for reviewing and supervising the licensed activities, advertising, transactions, contracts, and trust account handling of all affiliated licensees, and can be disciplined for failure to adequately supervise.

5. What is a trust (escrow) account in real estate brokerage, and whose money is held in it?

   A separate bank account a broker uses to hold OTHER people's money (earnest money deposits, rents, security deposits) in trust. The funds belong to clients/customers, never to the broker.

6. What is 'commingling' and why is it prohibited in trust account management?

   Commingling is mixing client/trust funds with the broker's own personal or operating funds (or leaving them in the broker's general account). It is prohibited because it endangers client money and is a common cause of license discipline.

7. What is 'conversion' of trust funds?

   Conversion is the unlawful use of trust account money for the broker's own purposes (misappropriation/embezzlement). It is more serious than commingling and is grounds for license revocation and criminal liability.

8. Within what general timeframe must a broker deposit earnest money into the trust account, and where must it be held until deposit?

   Earnest money must be deposited promptly per state law (commonly within a few business days of contract acceptance, e.g., 3 business days). Until deposited it must be safeguarded and not used by the broker.

9. When there is a dispute over earnest money between buyer and seller, what should a broker generally NOT do, and what are common proper resolutions?

   The broker should NOT unilaterally release/keep the funds. Proper resolutions include holding funds until written mutual agreement, mediation/arbitration, a court order, or interpleader (depositing funds with the court).

10. Why must a broker keep a reconciled record of the trust account, and how often is reconciliation typically required?

    To verify the trust account balance equals the total of all individual client liabilities owed. Reconciliation (comparing bank statement, journal/ledger, and liabilities) is typically required monthly.

11. What is a 'blind ad' in real estate advertising, and why is it prohibited?

    A blind ad is one that fails to disclose that the advertiser is a real estate licensee/broker (it looks like a for-sale-by-owner ad). It is prohibited because consumers must know they are dealing with a licensed professional.

12. When a salesperson advertises a listing, whose name must generally appear in the advertisement?

    The sponsoring/employing broker's name (the brokerage firm) must appear. A salesperson cannot advertise under only their own name as if independent.

13. Under federal Fair Housing advertising rules, what kinds of statements or preferences are prohibited in real estate ads?

    Any statement indicating a preference, limitation, or discrimination based on a protected class (race, color, religion, sex, national origin, familial status, or handicap/disability). Ads must not use discriminatory language or steer.

14. What is the Do-Not-Call Registry's relevance to a real estate licensee's marketing?

    Licensees generally may not make telemarketing/cold calls to numbers on the National Do-Not-Call Registry unless they have an established business relationship or written permission. Violations carry significant fines.

15. What is a property management agreement, and what relationship does it create between owner and property manager?

    A written contract by which a property owner hires a property manager to operate the property. It creates a general agency relationship (and fiduciary duties) covering authority, duties, compensation, term, and the manager's powers.

16. List the three primary financial/operational responsibilities of a property manager to the owner.

    1) Generate income (lease/maintain occupancy at the best rate), 2) Preserve and increase the property's value (maintenance), and 3) Manage finances/accounting (collect rents, pay expenses, report to owner). Often summarized as serving the owner's goals while satisfying tenants.

17. What is the difference between corrective, preventive, and routine maintenance in property management?

    Corrective: repairing an actual breakdown/problem. Preventive: scheduled upkeep to prevent future problems and extend useful life. Routine: day-to-day cleaning and general operations of the property.

18. How is a property manager typically compensated under a management agreement?

    Usually a percentage of the gross collected rents (sometimes a flat fee, plus leasing commissions for new tenants and possible fees for capital projects). It is generally based on collected income, not just billed rent.

19. Compare the four common types of leases by who pays operating expenses: Gross, Net, Percentage, and Ground lease.

    Gross: tenant pays fixed rent, landlord pays expenses. Net: tenant pays rent plus some/all of taxes, insurance, maintenance. Percentage: rent is a base plus a percentage of tenant's sales (retail). Ground: long-term lease of land only; tenant owns/builds improvements.

20. What is the difference between an assignment and a sublease of a leasehold?

    Assignment transfers the tenant's ENTIRE remaining interest to a new tenant (assignee deals directly with landlord). Sublease transfers PART of the interest/term; the original tenant remains liable and becomes a sublessor to the subtenant.

21. Distinguish the four types of leasehold estates: estate for years, periodic, estate at will, and estate at sufferance.

    Estate for years: fixed start/end date. Periodic: renews automatically period-to-period until notice (e.g., month-to-month). At will: indefinite, terminable by either party at any time. At sufferance: tenant holds over wrongfully after the lease ends.

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