Tennessee Realtor State Practice Exam

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Who is legally allowed to receive direct compensation from clients for real estate activities in Tennessee?

A real estate broker only
An affiliate broker
A real estate agent
A property manager

The correct answer is: A real estate broker only

In Tennessee, the law specifies that only a licensed real estate broker is permitted to receive direct compensation from clients for real estate activities. This means that when clients engage a broker to facilitate transactions, they can legally pay the broker for their services. Brokers hold a higher level of licensure, which allows them to operate independently and directly engage in real estate transactions on behalf of clients. While affiliate brokers and real estate agents work under the supervision of brokers and may assist in real estate transactions, they cannot receive compensation directly from clients. Instead, they must be compensated through their designated broker. Property managers, on the other hand, perform property-related tasks but are also typically compensated via a brokerage or management firm rather than directly from property owners. Understanding this hierarchy of compensation in Tennessee real estate is crucial for compliance with state regulations.