====== Real Estate Company (Income & Commissions) ======

A **real estate company** earns income primarily through **commissions and fees** for services performed in real estate transactions.

===== Gross Income =====
  * **Gross income** is the **total income received** before any expenses are deducted
  * Includes:
    * Sales commissions
    * Leasing commissions
    * Property management fees
    * Referral fees
    * Consulting or brokerage fees

===== Commissions =====
  * A **commission** is compensation paid for completing a real estate transaction
  * Usually based on a **percentage of the sales price or lease value**
  * Must be **agreed to in advance**
  * Must be paid only to a **licensed broker**

===== Distribution of Commissions =====
  * Broker receives the **entire commission**
  * Broker may then pay:
    * Salespersons
    * Broker-associates
  * Salespersons are **never paid directly by clients**

===== Net Income =====
  * **Net income** = gross income − operating expenses
  * Common expenses:
    * Salaries and commissions paid out
    * Office rent
    * Advertising and marketing
    * Insurance and licensing fees

===== Trust Funds =====
  * Client funds held by a broker (deposits, rents) are **not income**
  * Must be held in a **trust account**
  * Commingling is prohibited

===== Exam Tip =====
  * Gross income is income **before expenses**
  * Commissions are earned by the **broker**, not the salesperson
  * Trust funds are **not part of gross income**