Tennessee Realtor State Practice Exam

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What is the primary concern for a broker when conducting a contest to attract clients?

Marketing expenses
Legal restrictions
Competition with other brokers
Public interest

The correct answer is: Legal restrictions

The primary concern for a broker when conducting a contest to attract clients is legal restrictions. This is important because contests can sometimes fall under regulatory scrutiny, especially in the real estate sector. Brokers must ensure that the contest complies with state and federal laws, including regulations regarding advertising and promotions. These laws can dictate how contests should be structured, what disclosures are necessary, and how winners are determined to avoid claims of unfair competition or misleading practices. For instance, failure to comply with legal requirements can lead to penalties, including fines or legal challenges, which can be detrimental to the broker's business. While marketing expenses, competition with other brokers, and public interest are relevant factors in contest planning, they do not carry the same weight of immediate legal accountability as ensuring compliance with applicable laws. Therefore, the necessity to navigate legal restrictions effectively is crucial for a broker looking to execute a successful contest without running into legal issues.