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Real Estate Brokerage: A Management Guide, Eighth Edition

Final Exam 1

1. What can a real estate company learn from the Great Recession?a. Real estate prices always increase over timeb. Types of mortgage loans do not affect the overall real estate economyc. The stock market has little to do with the real estate marketd. Anticipate changes in national and international economies

2. The current real estate market is ina. conflict.b. recovery.c. accesseration.d. deceleration.

3. The Internet Data Exchange (IDX) allowed consumers access to a. only company listings.b. only listings with special permission from their owners.c. any listings of cooperating multiple listing service (MLS) brokers.d. any listing on the market including for-sale-by-owner listings.

4. Which of the following has a great deal of impact on the real estate industry?a. State and federal regulatory lawsb. Wall Streetc. National Association of REALTORS®

d. Consumer Union

5. A more accurate term for the process by which companies realign their operations to be more profitable isa. downsizing.b. upsizing.c. reengineering.d. rightsizing.

6. In order to increase revenue, a service industry such as real estate cana. manipulate production.b. decrease the number of services provided.c. institute a one-size-fits all model.d. not charge transaction fees.

©2013 Kaplan, Inc.


7. The characteristic of a leader to accept responsibilities for outcomes isa. accountability.b. integrity.c. trustworthiness.d. decisiveness.

8. People come to work for different reasons. In contemporary business practices, theprocess by which a manager is able to encourage people who have different motivesand goals to work together is calleda. collaboration.b. team building.c. peer control.d. group effort.

9. The very nature of a leadership position confers a. respect.b. powerc. loyalty.d. integrity.

10. Managers can effectively accomplish an enormous amount of work if they learn the fine art ofa. encouraging loyalty to the company.b. building teams.c. assisting their people to gain experience.d. delegating authority.

11. What is the style of the manager who exercises complete control over his or hersubordinates and does NOT tolerate participation?a. Autocratic styleb. Dictatorial stylec. Participatory styled. Laissez-Faire style

12. Which style of management is often utilized by management to take advantage of theself-directed workplace and avoids getting too involved?a. Autocratic styleb. Dictatorial stylec. Participatory styled. Laissez-Faire style

©2013 Kaplan, Inc. 2


13. People are more likely to be encouraged to produce more if the managera. is highly critical.b. praises acceptable behavior.c. micromanages behavior.d. focuses on every mistake.

14. In today’s workplace, a manager is more likely to be supervising a persona. whose profile is different from the managers.b. who has been labeled successful or loser.c. whose background is very similar to the manager’s background.d. who may be quite prejudiced and thus difficult to work with.

15. What is one of the MOST difficult parts of becoming a sales manager in a real estateoffice?a. Learning transaction or technical skillsb. Winning the popularity contest with the salespeoplec. Labeling salespeople with an appropriate moniker or “handle”d. Changing from being a doer to a supervisor

16. Which of the following should be the goal of a successful sales manager?a. Allow the salespeople the freedom of self-directionb. Listen, but do not offer advice, when they come with problemsc. Set an example by being the top producer in the officed. Help salespeople reach their goals

17. To be MOST effective, a typical real estate sales manager should considera. returning to college to pick up a business degree.b. leaving real estate for a couple of years to gain experience from the corporateworld.c. taking a business management course.d. utilizing his or her expertise and training gained as a licensed salesperson.

18. What is the essence of communication?a. Monitoring performanceb. Correcting errors and deviations from the acceptable normc. Making tough decisionsd. Gathering and disseminating information



19. Which of the following is one of the best ways for a manager to gather information?a. Watching the body language of salespeople after the sales meetingb. Conducting weekly or bi-weekly interviewsc. Soliciting emailsd. Taking top producers to lunch

20. Which of the following is an example of effective communication?a. Listener "tunes off" because he doesn’t trust the speaker’s credibility and integrityb. Conversation issue becomes who’s right rather than what’s being saidc. Each person has a different perception of the relevance of what is being saidd. Time-sensitive data reaches the intended recipient

21. The basic rule when deciding to convene a meeting isa. regular meetings, with or without an agenda.b. have a clearly defined purpose for the meeting.c. find out who is available to attend before making up the schedule.d. publish an agenda well in advance.

22. In order to effectively make decisions, the manager should firsta. evaluate the outcome.b. develop alternatives.c. define the situation.d. implement the decision.

23. A manager has just negotiated a solution between two salespeople. This is an exampleofa. entrepreneurial decisions.b. corrective decisions.c. resource decisions.d. mediation decisions.

24. What is the first step when formulating a business plan?a. Selecting the location for the businessb. Recruiting, selecting, and hiring the staffc. Gathering information about the marketplace and factors that might impact operationsd. Determining marketing and advertising strategies



25. Which of the following is an example of an economic factor?a. Corporate developmentb. Housing marketsc. State regulatorsd. Environmental issues

26. The broadest indicator of the strength of the economy which show economic output and growth is thea. number of new housing starts (HNS).b. gross domestic product (GDP). c. consumer price index (CPI).d. gross profit margin (GPM).

27. Which of the following political issues benefit the real estate industry?a. Aggressive environmental regulationsb. Support of private property rightsc. Increase in regulations and taxes imposed on real estate businessesd. Changes in the tax law to slow down real estate investment

28. What is an example of a sociological factor that affects virtually every aspect of a company's business? a. Maturing adults who outnumber younger consumersb. Regulators who enforce laws that protect the public c. Environmental issues that affect the health and safety of consumersd. State tax policies that impact corporate development

29. Population shifts affect the need for housing and are often driven bya. employment opportunities.b. tax and property laws.c. environmental regulations to protect public health.d. inflationary cycles.

30. What has been the effect, if any, of the Internet on today’s real estate marketplace?a. It has had little or no effect. b. It has vastly changed the geographic market.c. It has restricted options.d. It has made it easier to win trust and maintain loyalties.



31. Due in part to the enormous liability brokers face today, it is advisable for brokers toa. offer a broad range of services.b. practice within the limits of the broker’s expertise.c. deal in all types of properties and transactions.d. offer appraising, auctioning, and escrow services in addition to sales.

32. Under which of the following contracts can a broker work with consumers and be paid a commission while still NOT representing the consumer?a. Exclusive buyer agency contractb. Exclusive right-to-sell listing agreementc. Transaction brokeraged. Exclusive buyer’s agent (EBA)

33. Some real estate companies are providing only the services that the client, either seller or buyer, desires and is willing to pay for. This type of service is calleda. the a-la-carte approach.b. open listings.c. exclusively only buyers representation.d. exclusive agency.

34. When analyzing potential business opportunities for a real estate company in the market place, which of the following would be LEAST significant when making a decision?a. Competitors market shareb. Income levels of competitors’ salespeople c. Number of potential users of your servicesd. Projected number of properties likely to sell

35. With regards to agency practices, whatever decisions that a broker makes regarding the company’s agency policies a. should be similar to those chosen by other brokers in the area.b. is unimportant as the salespeople are independent contractors who must define their own policies.c. must be supported by procedures and training programs to assist salespeople in day to day activities. d. should be flexible so that individual licensees affiliated with the company are free to choose those that are most beneficial to them.



36. What is the purpose of defining a company’s market? a. Identify target markets with sufficient business potentialb. Learn about competitors’ pricingc. Justify a prestigious locationd. Prepare the company to affiliate with a large franchise

37. Should a company go through the planning process?a. No, planning only raises expectations, so it is better to “go with the flow.”b. Yes, if the owner can find business-savvy friends to help with the plan.c. No, investing time and money in preparing a business plan is an unnecessaryuse of resources.d. Yes, planning can identify the methodology needed to meet the company’s goals.

38. What is the purpose of a business plan?a. Directs the organization’s financial and human resources to the activities thatyield the greatest return on the investmentb. Preserves resources for customary activities even if they produce marginalresultsc. Ensures that salespeople are satisfied with their commission splitsd. Provides the salespeople an opportunity to influence company direction

39. What does a good long-range plan do for a company?a. Helps the company to readily shift course when instant results do not materializeb. Helps the company be specific and not a wondering generality c. Should be intimidating to the workers so that they do not interfere with management dutiesd. Provides decisions through the end of the year.

40. The mission statement is the foundation of long range planning and provides a. specific goals for the organization.b. the fundamental purpose for the existence of an organization.c. strategies by which the goals will be reached.d. inspiration to members of the organization.

41. Contingency plans may be incorporated in the business plan toa. establishes alternative goals and strategies in the case of unforeseen events. b. allow the organization to spend resources in uncontrolled ways.c. provide methodology for accomplishing each goal.d. provide the priorities during the timeframe of the plan.



42. The working document for managers at all levels in the organization to monitor the organization’s progress over the course throughout the year is thea. business plan.b. executive summary.c. contingency plan.d. activity plan.

43. The legal form of ownership in which the broker personally reaps all of the rewards of the business but also bears the responsibility and personal liability for its losses isa. sole proprietorship.b. limited liability company.c. general partnership.d. S corporation.

44. Which of the following has unlimited liability?a. A stockholder in an S corporationb. An investor in a limited liability companyc. A general partner in a limited partnershipd. A stockholder in a corporation

45. The MOST common reason brokers join franchises isa. to enjoy maximum freedom to conduct their own affairs.b. to obtain the professional marketing and advertising expertise.c. to be able to follow the program laid out by the franchise.d. because they are relatively inexpensive to join.

46. When joining forces with another real estate company, which is likely to have the MOST significant bearing on the success of the new venture?a. Geographic location of the company’s officeb. Company’s affiliation with a franchisec. Retention of the organization’s sales forced. Company’s presence on the Internet

47. A small centralized operation in which the broker supervises the sales associates or hires a sales manager describes aa. one-person organization.b. one- to ten-agent organization.c. monolithic organization.d. decentralized organization.



48. Which of the following will MOST likely affect the location of a real estate sales office?a. Nature of the sales that will be done in that officeb. Proximity to the broker’s residencec. Lower rents in an out-of-the-way locationd. Accessibility to a major highway

49. In some offices, salespeople must call to reserve time at a desk. This new method of managing workstations is calleda. virtual offices.b. hotelling.c. a bull pen arrangement.d. electronic office.

50. One of the major reasons for the design of "open offices" in business today is that ita. provides safety for the staff.b. fosters teamwork and interaction among staff.c. enables managers to supervise more easily.d. serves customers and clients more effectively.

51. As companies become increasingly dependent on computerization, their ability to continue in business can be seriously compromised ifa. salespeople don’t use the technology that is available.b. regulators restrict the application of computers.c. data is not protected from a system failure.d. computers are not networked throughout the organization.

52. A broker decides to install text telephones to comply with thea. fair housing laws.b. Real Estate Settlement Procedures Act (RESPA).c. Americans with Disabilities Act (ADA).d. Truth-in-lending (TIL) laws.

53. Which of the following is NOT required by law, but could be considered a good-business investment?a. Text Telephonesb. Audio-supported computer softwarec. Entrance rampd. Multilingual communications



54. On an income statement, the total income minus the total expenses is thea. gross profit.b. net income.c. company dollar.d. break-even point.

55. The financial statement that reports the organization’s assets, liabilities, and owner equity is called thea. profit and loss statement.b. balance sheet.c. cash flow statement.d. double-entry financial statement.

56. The picture of an organization’s financial performance during a particular period of time is called thea. income and expense statement.b. balance sheet.c. pretax profit.d. owner’s equity.

57. What information is necessary for a cash flow statement? a. revenue and expenses.b. receipts and disbursements.c. assets and liabilities.d. profit and loss.

58. What type of financing is preferable if the owners do NOT want to give up any ownership interest?a. Equity financingb. Short term financingc. Debt financingd. Financing portfolio

59. When a company states how it intends to spend its money within the next year, , the company is working with aa. general operating budget.b. cash flow analysis.c. balance statement.d. profit and loss statement.



60. The “company dollar” is defined as the funds remaining from gross income after the cost of sales has been deducted. Of the following, which is considered cost of sales?a. Fixed operating expensesb. Variable expensesc. Marketing expensesd. Commissions, MLS, franchise, and referral fees

61. A set of beliefs that outlines a company’s value system and the right way for it to do business is calleda. an ethnic code.b. standards.c. its business ethics.d. the “golden rule.”

62. Which of the following would be addressed in the employee policy manual?a. Vacation and sick timeb. Cooperation among salespeoplec. Open house proceduresd. Coinsurance on automobiles

63. A broker or manager can implement ethical behavior throughout the organization bya. avoiding stiff penalties for violations.b. applying different standards to behavior for part time versus full time staff.c. tolerating unethical behavior if it gets the job done.d. putting the organization’s code of ethics in writing.

64. What is the purpose of the policy and procedures manual?a. Tells the people who work for the company the day-to-day rules of conductb. Guides the conduct of the sales associates to be consistent with the organization’s business objectivesc. Directs internal procedures governing employment and employee relationsd. Required by OSHA rules and outlines safety issues in the workplace

65. Once company policies and procedures have been developed, management shoulda. consistently enforce the rules.b. intermittently administer sanctions.c. apply the standards only when absolutely necessary.d. permit some people to get around the rules if they have a good reason.



66. The traditional focus of marketing in real estate has been the promotion of the firm’sa. sales associates.b. listings.c. services.d. location.

67. Today, which mass media marketing tool should be the centerpiece of any media campaign?a. Televisionb. Radioc. Digital mediad. Print media

68. According to the Telephone Consumer Protection Act, “existing customers” are defined as a. any owner whose listing expired in the MLS.b. people with whom the salesperson has done business in the past 18 months.c. anyone who has called the real estate company for information.d. owners of properties located in the general marketing area of the real estate company.

69. When advertising a listing, the owner’s position must be accurately represented, such as publishinga. only the price authorized by the owner.b. information that could compromise the owner’s negotiation position.c. information that violates the broker’s fiduciary responsibility to the owner.d. typographical errors.

70. Who is responsible for advertising accuracy?a. Brokerb. Listing salespersonc. Sellerd. Office manager

71. Calculate the desk cost for a real estate company which has eight desks and 12 salespeople. Its annual operating budget is $275,000; an extra secretary is $16,500 and cleaning service is $75 per month. The cost of sales averages 47 percent of the gross commissions.a. $13,596b. $20,394c. $24,367d. $36,550



72. An independent contractor can be designated as full- or part-time based ona. number of hours worked per week.b. production.c. other sources of income.d. years of experience.

73. A broker interviewed four candidates. He hired one, and rejected three. The broker may have violated the employment laws by refusing to hire the other applicants. In which of the following instances is the broker justified in NOT hiring the applicant?a. A 58-year-old woman, real estate sales for 15 yearsb. A 35-year-old male, residential home builder, preparing for the state license examc. A woman in her early 30s, GRI, expecting her first child in six monthsd. A man in his late 40s, million dollar club last three years, uses a wheelchair

74. Why is the independent contractor model the tradition in the real estate industry?a. Provides more the broker with more control over the production by the sales forceb. Performance based with people being motivated to work harder to make more moneyc. Broker has more time to sell since he or she is not required to supervise theindependent contractorsd. Broker can closely supervise specific tasks and hold people accountable with the goal of promoting better production and better quality service.

75. What does internal equity mean?a. All people who work in the same class of jobs are paid at the same rate as in other companies.b. People with greater experience or with specialized jobs are compensated at higher rates.c. The compensation of one sales associate is commensurate with the pay that another salesperson with similar experience or production receives.d. A company may pay staff according to the money available at the time staff was hired.

76. Which step in the hiring process consists of assembling a pool of candidates for consideration?a. Prescreeningb. Recruitingc. Selectiond. Hiring



77. What is the MOST important issue that managers should remember when prescreening?a. Any method must be applied uniformly to ensure that all applicants have an equal opportunity to be consideredb. The application form should request a photo to ensure that minorities have an equal chancec. Only written applications should be considered, not face-to-faced. In the preliminary conversation, the manager should tell the company's story and ask if the applicant still wants to be considered

78. In the prescreening process, the manager realized that none of the applications really met the job description. How should the manager proceed?a. Practice interviewing skills by interviewing the applicantsb. Start the recruiting process overc. Interview the applicant(s) who might be trainable for the specific jobd. Rework the job description and ask the applicants if they are still interested

79. Which of the following activities are prohibited in the selection process?a. Using a job test after an individual is hiredb. Verify credit history with permission from the applicantc. Drug testing for any minority applicantd. Require criminal background checks for any applicant

80. Of the following, the MOST desirable method to attract experienced sales associates to the real estate company is a. sending recruiting letters to a competitor’s office.b. making the rounds of open houses to meet potential salespeople.c. waiting for the experienced sales associates to approach the manager.d. having the current staff recruit top-notch sales associates.

81. The BEST training method for new licensees is toa. have them learn “scripts” of what to say when a customer makes a comment or raises an objection.b. use a strategy that works for other sales associates.c. give them tools that enable them to "think on their feet" to evaluate situations and respond appropriately.d. attend a motivational seminar once a week.

82. Which of the following MOST clearly indicates the value of training?a. Enthusiastic evaluations at the end of each training dayb. Changes in behavior after the classes are overc. No one drops out of the training sessionsd. Some of the attendees want to become trainers themselves



83. Training can be MOST effective when managementa. follows a hands-off policy.b. reinforces the training with one-on-one follow up.c. piles on lots of information early on.d. begins with technical information first, followed by people skill training.

84. The key to an effective brainstorming session isa. listening only to people who will be affected by the outcome.b. gaining consensus on the best solution.c. no criticism of any offered solution.d. to extensively critique each idea as it is raised.

85. What is the benefit of an in-house training program?a. Major financial commitmentb. Trainers are often professionalsc. Greater impact than using outside trainersd. More control over the entire delivery

86. Performance standards for sales agents should be linked toa. changing their deficiencies in skills or abilities.b. specific, measurable outcomes.c. arbitrary outcomes necessary for company profit.d. improving ineffective leadership that hinders their performance.

87. The minimum average production (MAP) isa. calculated by adding the minimum profit expected from the operation to the desk cost and dividing that number by the number of agents.b. used to determine if a sales associate is producing a profit.c. the minimum amount management expects from each sales associate.d. Any of these.

88. When terminating a sales associate, consideration must be given toa. whether the person is a top producer.b. the legal implications of termination.c. testimony of other sales associates.d. relationship to the owner of the company.



89. Of the following, which is the MOST common reason why a sales associate would leave the firm?a. Didn’t like the commission splitb. Dissatisfied with the management of personnelc. Unhappy because low producers were not terminatedd. Felt they should receive more leads and referrals

90. What is the absolute final step of the disciplinary process?a. Counselingb. Setting standardsc. Terminationd. Documenting the unacceptable behavior

91. What is the legal requirement for retaining documents that pertain to real estate transactions?a. The IRS requires that they should be kept indefinitely.b. These records are used primarily for tax preparation and may be discarded after filing the company return.c. Because the legal requirements for retaining real estate documents vary from state to state, brokers should review state requirements to be in compliance.d. Good business practice dictates that management should retain all important documents for at least eight years.

92. What is the objective in monitoring the expense of marketing and advertising?a. Improve the bottom line in tough timesb. Reduce the cost of contactc. Justify the use of more Internet d. Justify requiring the sales associates to chip in

93. Is there any value to asking sales associates to maintain phone logs?a. Yes, the company can determine advertising effectiveness by monitoring per contactcost over several months.b. No, since sales vary according to the different times of the year.c. Yes, they give the sales people something to do during floor time.d. No, since someone has to actually convert the contacts to contracts anyway.

94. Which of the following is the BEST way to determine the effectiveness of a company Web site?a. Number of daily hitsb. Cost of site placementc. Conversion of leads into contractsd. Awards received for the site



95. After reviewing ways to improve the “bottom line” for the firm, management may need to revise its plan and make some changes such asa. closing a division which is not showing enough profit.b. increasing its capacity for providing its current services (vertical growth).c. branching out in related fields, e.g. property management, appraisal, mortgage lending or escrow (horizontal growth).d. Any of these.

96. Risk management involves reactive measures and proactive steps to minimize potential loss to the company. Which of the following would be considered proactive?a. Recognizing potential problems and preparing procedures to avoid themb. Setting aside a litigation fundc. Purchasing liability errors and omissions insuranced. Deciding that litigation is just another cost of doing business

97. State real estate license laws impact all of the following EXCEPTa. advertising.b. workplace safety.c. agency relationships.d. document management.

98. First, a company should analyze the level of risk to the organization, and thena. find ways to hide the problems.b. look for loopholes to circumvent the risk.c. develop possible solutions to prevent the risk.d. put aside money in a contingency fund to pay the legal bills.

99. The BEST defense in risk management isa. a good lawyer.b. an exceptional accountant.c. deep pockets insurance policy.d. complete company files in order, in writing.

100. The insurance policy that protects the company from certain claims against the company isa. errors and omissions insurance.b. liability insurance.c. workers’ compensation.d. loss of business insurance.


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