New Mexico Real Estate Broker Exam Study Guide
The New Mexico Real Estate Broker Exam is a state examination to determine if a candidate is qualified to perform the job of a real estate broker. The test consists of 125 questions that must be completed during a three-hour testing session. However, the exam is divided into a national portion and a state portion, with two hours allotted for the national portion and one hour allotted for the state portion. Candidates are permitted to bring non-programmable, silent calculators without alphabetic keys to aid with math questions on the exam.
New Mexico Real Estate Broker Exam Study Guide - National Portion
|Topics||% of Questions|
|Property Ownership||10% (≈ 8 questions)|
|Land Use Controls and Regulations||5% (≈ 4 questions)|
|Valuation and Market Analysis||7% (≈ 5 questions)|
|Financing||8% (≈ 6 questions)|
|General Principles of Agency||11% (≈ 8 questions)|
|Property Disclosures||7% (≈ 5 questions)|
|Contracts||18% (≈ 13 questions)|
|Leasing and Property Management||5% (≈ 4 questions)|
|Transfer of Title||7% (≈ 5 questions)|
|Practice of Real Estate||14% (≈ 11 questions)|
|Real Estate Calculations||8% (≈ 6 questions)|
The national portion of the New Mexico Real Estate Broker Exam consists of 75 multiple-choice questions that can grant up to 80 points to a candidate's total score, meaning some questions are worth twice as much as other questions. This portion of the exam addresses the basic understanding of real estate concepts and federal laws governing real estate. These topics are explored in-depth through the New Mexico Real Estate Broker Exam Study Guide.
The Property Ownership section of the exam is a perfect topic to begin the national portion of the exam, as it explores the basic concepts and types of property ownership. Questions test candidates on the difference between real and personal property as well as the characteristics of sole ownership, interest-in-common ownership, and property ownership held in trust. Candidates may also encounter questions about various rights an owner may or may not possess regarding their property, factors that impact ownership, and the types of legal descriptions for a property based on location, measurements, and usage.
Land Use Controls and Regulations
The Land Use and Controls section of the exam focuses on how an owner may use their property and the various conditions or outside forces that impose limitations on property use. This includes both public and private controls, meaning government-issued controls or controls from non-governmental sources. Public controls include the use of a property by the government but may also include environmental protection restrictions, mandatory hazard abatement, zoning rules, and building codes. Private controls imposed on land use include the regulations involved with a homeowners' association, which is why the presence of one is a mandated disclosure, and deed restrictions.
Valuation and Market Analysis
The Valuation and Marketing Analysis section of questions address how real estate professionals determine how much a property is worth and how much it should sell for based on the current market conditions at the time of sale. This includes an exploration of value estimation methods commonly used in the real estate industry, as well as the use of a comparative/competitive market analysis to adjust the market price based on different comparables. Finally, candidates must identify situations that require a full appraisal by a licensed appraiser rather than a value estimation.
The Financing topic section ensures that newly licensed real estate professionals are fully versed in the terminology, key concepts, and regulations involved in real estate financing. Questions in this section explore types of loans, lending laws, the underwriting process, and terms all candidates must be familiar with, such as interest rate, mortgage, discount points, loan-to-value ratios, and more. Loan types that candidates should be able to identify and describe include bridge, conventional, amortized, and adjustable-rate mortgages, as well as the intricacies involved in VA loans, FHA loans, USDA loans, and situations of seller financing in a transaction.
General Principles of Agency
The General Principles of Agency section of the exam explores the relationship between a real estate professional and a client during a real estate transaction. Questions probe a candidate's awareness of both agency and non-agency relationships in New Mexico, the types of agents commonly found in real estate, and the relationships between salespersons acting as agents and brokers. Additionally, questions may investigate the creation of an agency agreement contract, the duties of all parties in an agency relationship, and the conditions that terminate the agency agreement, such as contract expiration, property destruction removing the property from the market, and legally-forced termination.
The Property Disclosures section of the exam focuses on issues specific to a property that must be told to potential buyers, either for legal or ethical reasons. These conditions typically fall into material facts and defects, environmental issues, issues of property condition, and government-mandated disclosures. Government-mandated disclosures often require the disclosure of lead or other harmful substances in a structure on a property, including asbestos, radon, and toxic mold. Material facts and defects also apply to structures but involve problems with a structure that should be remedied, such as an old or leaky roof, a cracked foundation, or outdated wiring. Environmental issues can include contaminated water or soil on a property as well as protected ecosystems that prevent development. Finally, property conditions refer to any condition that may change how land may be used and conditions that may require a survey.
The longest section on the exam is the Contract section in the exam's national portion. This is because contracts are used in all aspects of real estate, including between a brokerage and its employees, between buyers and sellers, and between buyers and organizations financing the transactions. Questions in this section explore the various types of contracts, particularly the purchasing offer contract and counteroffers, as well as common concepts found in contract law. These concepts include breach of contract, validity, enforceability, unilateral contracts, bilateral contracts, and the use of electronic signatures. Finally, questions may also investigate the use of contingencies in a purchasing offer, amendments to a contract, and the delivery and acceptance process of a contract.
Leasing and Property Management
The Leasing and Property Management part of the exam addresses the part of real estate engaged with rental properties instead of the buying and selling of property. Candidates must demonstrate their understanding of fair housing regulations, including identifying protected classes and the activities prohibited by Fair Housing laws and the Americans with Disabilities Act. Additionally, candidates are tested on tenants' rights, landlords' rights, and how real estate brokers calculate the value to charge for leasing a property.
Transfer of Title
The Transfer of Title section of the exam explores the legal processes and issues involved in transferring the ownership of a property from one person to another. Questions in this section address the importance of title insurance during a sale, the use of home warranties, the closing process of a transaction, and the relationship between deeds and titles. Candidates should know the types of deeds encountered in real estate, the characteristics of each type, the purpose of title insurance, what title insurance covers, and cloud on title issues or suits to quiet a title when a problem arises.
Practice of Real Estate
The Practice of Real Estate section of the exam is a lengthy section that investigates common aspects of doing business in the real estate industry. This topic explores the regulations surrounding real estate advertising and the use of technology for advertising, the relationship between real estate salespersons and brokers in a brokerage, the specifics of Fair Housing regulations, and how to comply with both Fair Housing laws and the Americans with Disabilities Act. Additionally, questions in this section may investigate the use of trust accounts, regulations surrounding the handling of client money, and the purpose of antitrust laws.
Real Estate Calculations
The Real Estate Calculations section of the exam is a math test within the national portion of the exam that explores common calculations used in real estate. These calculations include the physical dimensions of a property or its structures, financing calculations that include loan-to-value (LTV) ratios, down payment percentages, interest rates, closing costs, and property taxes. The calculation can also include questions about home equity values, the commissions an agent earns or splits with another agent, and the proceeds a seller earns at the end of the transaction. Finally, brokers are tested on calculating the operating costs of a brokerage, broker opinion pricing, and the return on investment for investment properties.
New Mexico Real Estate Broker Exam Study Guide - State Portion
The state portion of the New Mexico Real Estate Broker Exam focuses on state-specific topics and state regulations that affect New Mexico real estate transactions and relationships. Test-takers will find 50 multiple-choice questions divided into five topics, which cover state regulations, licensing, and the state's real estate commission, all of which are addressed by the New Mexico Real Estate Broker Exam Study Guide.
|Topics||% of Questions|
|Real Estate Commission||12% (≈ 6 questions)|
|Licensing Requirements||14% (≈ 7 questions)|
|Real Estate Commission Regulations||30% (≈ 15 questions)|
|Broker Duties, Disclosure and Brokerage Relationships||30% (≈ 15 questions)|
|Additional State-Required Topics||14% (≈ 7 questions)|
Real Estate Commission
The first section of this portion focuses on the Real Estate Commission. This is the governing agency that oversees real estate transactions in the state of New Mexico. There are six questions in this section that address all aspects of the commission, including their power to set regulations and requirements for a real estate license, investigative powers to audit records and determine if a complaint against a real estate professional is valid, and the ability to impose penalties for real estate violations. These penalties can range from a simple fine to a permanent revocation of a real estate professional's license.
The Licensing Requirements section of the exam contains seven questions and addresses issues surrounding the attainment of a real estate license and how to maintain it in good standing. Questions in this section involve the required prerequisites for a candidate to earn their real estate license, such as passing a background check, completing the education requirements, passing the licensure exam, holding error and omissions insurance, following through with the licensing procedure, and having the required background experience in real estate for a broker's license. This section also includes questions differentiating between activities that do not require a license in real estate and activities that can only be performed by individuals with a valid real estate license.
Real Estate Commission Regulations
The Real Estate Commission Regulations section outlines the numerous responsibilities and regulations set by the New Mexico Real Estate Commission to govern the state's real estate industry. This includes regulations on the required and prohibited elements of advertisements and signage, using social media and other technology in advertising, record-keeping requirements, and the relationship between brokers and sales associates, as well as with other real estate professionals. This section also includes an overview of property management regulations in New Mexico, including the need for a qualifying broker for property management, the management contract, handling trust accounts for a client, and the duties of a property manager.
Broker Duties, Disclosure and Brokerage Relationships
All of the various duties and aspects of being a professional real estate broker are investigated in the Broker Duties, Disclosure and Brokerage Relationships part of the exam. This includes the duties of brokers to supervise real estate professionals under their employment, professional and ethical conduct guidelines, written disclosures for property conditions and brokerage relationships, and the types of brokerage relationships that are recognized by real estate regulations in New Mexico. In addition to these topics, questions also include an exploration of the accounting for money and property requirements, implied and required confidentiality for clients, and compliance with all local, state, and federal laws.
Additional State-Required Topics
In the final state-specific section, test-takers will see a variety of topics that real estate professionals may encounter in New Mexico and the regulations surrounding those topics. Questions may address disclosure issues, including the disclosure of a homeowner's association (HOA), disclosure of a property's inclusion in a public improvement district (PID), and the presence and condition of a septic system on a property. Candidates must also answer questions regarding property taxes, liens on a property, water rights to a property, and the New Mexico Human Rights Act.
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