Page |1
TEXAS REAL ESTATE BROKERAGE SAE FINAL
EXAM | 2026/2027 LATEST UPDATE | PRACTICE
QUESTIONS AND VERIFIED ANSWERS | EXAM
REVIEW | STUDY GUIDE.
Table of Contents
Table of Contents
1. Exam Overview and TREC Requirements
2. Brokerage Business Planning and Operations
3. Agency Law and Fiduciary Duties
4. Independent Contractor vs. Employee Status
5. Antitrust Laws and Compliance
6. Risk Management and Data Security
7. Marketing, Prospecting, and Sales Strategy
8. Brokerage Finance and Compensation
9. Texas-Specific Regulations and TREC Rules
10. TREC Commission Duties and Powers
11. Trust and Escrow Account Management
12. Practice Questions with Detailed Solutions
13. Study Strategies and Exam-Day Tips
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Question 1: Which of the following best describes the purpose of a mission
statement for a real estate brokerage?
A) It outlines the day-to-day operations of the company
B) It announces to the world what the company's long-term goals are and describes
the overall purpose of the organization
C) It defines how the company's work will be accomplished
D) It outlines the steps and resources needed to fulfill objectives
Correct Answer: B) It announces to the world what the company's long-term
goals are and describes the overall purpose of the organization
A mission statement announces to the world what the company's long-term goals
are, describing the overall purpose of the organization. A value statement defines
how the company's work will be accomplished. An action plan outlines the steps
and resources to fulfill objectives.
Question 2: What does the term "business activity management" refer to in a real
estate brokerage?
A) A process that helps brokerage owners recognize, define, and analyze critical
risks and opportunities
B) The evaluation of a brokerage's structure to improve efficiency
C) Growth through adding specialty departments
D) A set of policies for handling sensitive information
Correct Answer: A) A process that helps brokerage owners recognize, define,
and analyze critical risks and opportunities
Business activity management is a process that can help brokerage owners
recognize, define, and analyze critical risks and opportunities. Data retention
, Page |3
plans involve policies for handling sensitive information. Lean management is the
evaluation of a brokerage's structure to improve efficiency.
Question 3: What is "lean management" in the context of a real estate brokerage?
A) A process for hiring new agents
B) The evaluation of a brokerage's structure to improve efficiency and maximize
what customers value, with an eye on cost reduction
C) A method for increasing commission splits
D) A type of marketing strategy
Correct Answer: B) The evaluation of a brokerage's structure to improve
efficiency and maximize what customers value, with an eye on cost reduction
Lean management is consistently evaluating and improving efficiency to maximize
what customers value about the business, always with an eye out for cost
reduction. According to lean management principles, the 8 hidden wastes in most
companies are defects, overproduction, waiting, non- or underutilized people,
transportation, inventory, motion, and extra or overprocessing (DOWNTIME).
Question 4: Which of the following business planning activities breaks the long-
range plan down into smaller tasks and identifies which segments of the company
are responsible for doing what?
A) Strategic planning
B) Operational planning
C) Mission statement
D) SWOT analysis
Correct Answer: B) Operational planning
Operational planning breaks the long-range plan down into smaller tasks and
identifies which segments of the company are responsible for doing what. Strategic
, Page |4
planning focuses on the big picture. A mission statement describes the overall
purpose. A SWOT analysis assesses strengths, weaknesses, opportunities, and
threats.
Question 5: What is a recommended cash reserve for new brokerages?
A) 1 month of operating expenses
B) 3 months of operating expenses
C) 6 months of operating expenses
D) 12 months of operating expenses
Correct Answer: C) 6 months of operating expenses
Industry experts recommend that new brokerages have approximately 6 months of
operating expenses available in cash reserves. This provides a financial cushion
during the startup phase when revenue may be inconsistent.
AGENCY LAW AND FIDUCIARY DUTIES
Question 6: What is the acronym used to remember the fiduciary duties owed by
an agent to a client?
A) OLD CAR
B) CARE
C) SWOT
D) AIDA
Correct Answer: B) CARE
The fiduciary duties owed by an agent to a client are commonly remembered by the
acronym CARE: Confidentiality, Accounting, Reasonable care, Disclosure (of
material facts), Loyalty, and Obedience. The duty of loyalty requires the agent to
put the client's interests above their own.
TEXAS REAL ESTATE BROKERAGE SAE FINAL
EXAM | 2026/2027 LATEST UPDATE | PRACTICE
QUESTIONS AND VERIFIED ANSWERS | EXAM
REVIEW | STUDY GUIDE.
Table of Contents
Table of Contents
1. Exam Overview and TREC Requirements
2. Brokerage Business Planning and Operations
3. Agency Law and Fiduciary Duties
4. Independent Contractor vs. Employee Status
5. Antitrust Laws and Compliance
6. Risk Management and Data Security
7. Marketing, Prospecting, and Sales Strategy
8. Brokerage Finance and Compensation
9. Texas-Specific Regulations and TREC Rules
10. TREC Commission Duties and Powers
11. Trust and Escrow Account Management
12. Practice Questions with Detailed Solutions
13. Study Strategies and Exam-Day Tips
, Page |2
Question 1: Which of the following best describes the purpose of a mission
statement for a real estate brokerage?
A) It outlines the day-to-day operations of the company
B) It announces to the world what the company's long-term goals are and describes
the overall purpose of the organization
C) It defines how the company's work will be accomplished
D) It outlines the steps and resources needed to fulfill objectives
Correct Answer: B) It announces to the world what the company's long-term
goals are and describes the overall purpose of the organization
A mission statement announces to the world what the company's long-term goals
are, describing the overall purpose of the organization. A value statement defines
how the company's work will be accomplished. An action plan outlines the steps
and resources to fulfill objectives.
Question 2: What does the term "business activity management" refer to in a real
estate brokerage?
A) A process that helps brokerage owners recognize, define, and analyze critical
risks and opportunities
B) The evaluation of a brokerage's structure to improve efficiency
C) Growth through adding specialty departments
D) A set of policies for handling sensitive information
Correct Answer: A) A process that helps brokerage owners recognize, define,
and analyze critical risks and opportunities
Business activity management is a process that can help brokerage owners
recognize, define, and analyze critical risks and opportunities. Data retention
, Page |3
plans involve policies for handling sensitive information. Lean management is the
evaluation of a brokerage's structure to improve efficiency.
Question 3: What is "lean management" in the context of a real estate brokerage?
A) A process for hiring new agents
B) The evaluation of a brokerage's structure to improve efficiency and maximize
what customers value, with an eye on cost reduction
C) A method for increasing commission splits
D) A type of marketing strategy
Correct Answer: B) The evaluation of a brokerage's structure to improve
efficiency and maximize what customers value, with an eye on cost reduction
Lean management is consistently evaluating and improving efficiency to maximize
what customers value about the business, always with an eye out for cost
reduction. According to lean management principles, the 8 hidden wastes in most
companies are defects, overproduction, waiting, non- or underutilized people,
transportation, inventory, motion, and extra or overprocessing (DOWNTIME).
Question 4: Which of the following business planning activities breaks the long-
range plan down into smaller tasks and identifies which segments of the company
are responsible for doing what?
A) Strategic planning
B) Operational planning
C) Mission statement
D) SWOT analysis
Correct Answer: B) Operational planning
Operational planning breaks the long-range plan down into smaller tasks and
identifies which segments of the company are responsible for doing what. Strategic
, Page |4
planning focuses on the big picture. A mission statement describes the overall
purpose. A SWOT analysis assesses strengths, weaknesses, opportunities, and
threats.
Question 5: What is a recommended cash reserve for new brokerages?
A) 1 month of operating expenses
B) 3 months of operating expenses
C) 6 months of operating expenses
D) 12 months of operating expenses
Correct Answer: C) 6 months of operating expenses
Industry experts recommend that new brokerages have approximately 6 months of
operating expenses available in cash reserves. This provides a financial cushion
during the startup phase when revenue may be inconsistent.
AGENCY LAW AND FIDUCIARY DUTIES
Question 6: What is the acronym used to remember the fiduciary duties owed by
an agent to a client?
A) OLD CAR
B) CARE
C) SWOT
D) AIDA
Correct Answer: B) CARE
The fiduciary duties owed by an agent to a client are commonly remembered by the
acronym CARE: Confidentiality, Accounting, Reasonable care, Disclosure (of
material facts), Loyalty, and Obedience. The duty of loyalty requires the agent to
put the client's interests above their own.
