Free New Mexico Real Estate Practice Test (2026) — LicenseIQ

Question 1

A commercial property has potential gross income of $240,000 and an 8% vacancy allowance. Using a gross income multiplier of 6, what is the estimated value?

Accepted Answer

EGI = $240,000 - 8% = $220,800; value = $220,800 x 6 = $1,324,800.

Question 2

Acting as an associate broker in New Mexico without a license is classified as:

Accepted Answer

61-29-17(A) makes unlicensed practice a fourth degree felony. The $500 and six-month misdemeanor penalty applies to other violations of Article 29.

Question 3

The federal Fair Housing Act (1968) protects all of the following EXCEPT:

Accepted Answer

Federal protected classes: race, color, religion, national origin, sex, disability and familial status - not occupation.

Question 4

In a lease, the tenant holds a ____ estate and the landlord holds a ____.

Accepted Answer

The lessee has a leasehold (non-freehold) estate; the lessor retains the leased fee interest plus the reversion.

Question 5

A property is assessed at $200,000 and the tax rate is $2.50 per $100 of assessed value. What is the annual tax?

Accepted Answer

$200,000 / 100 = 2,000 units; 2,000 x $2.50 = $5,000.

Question 6

What is the maximum deductible permitted under the required E&O coverage?

Accepted Answer

The rule caps the deductible at $1,000 per claim and bars any deductible for legal expenses and defense. $5,000 is the minimum lockbox sublimit.

Question 7

How often must a broker complete the 4-hour NMREC Core course?

Accepted Answer

The Core course is taken annually, three iterations per cycle, each with new content. Core electives and ethics are once-per-cycle requirements.

Question 8

A house is L-shaped: one section is 40 ft by 30 ft and the other is 20 ft by 15 ft. At $185 per square foot, what is the estimated cost to build?

Accepted Answer

Area = (40 x 30) + (20 x 15) = 1,200 + 300 = 1,500 sq ft; 1,500 x $185 = $277,500.

Question 9

Which appraiser credential allows appraisal of any type of property, residential or commercial, without a value limit?

Accepted Answer

Certified General appraisers may appraise any property. Certified Residential appraisers are limited to 1-4 unit residential; Licensed Residential to noncomplex 1-4 units under $1 million.

Question 10

An associate broker's team name on a postcard is set in 48-point type. What is the minimum type size for the brokerage trade name and phone?

Accepted Answer

The brokerage name and phone must be at least 33% of the team name's type size: 0.33 x 48 = 15.84, so about 16 points.

Question 11

During a listing walk-through, the agent notices fresh paint on one ceiling area and a musty odor. The agent should:

Accepted Answer

Agents are not inspectors, but must recognize red flags (stains, odors, cracks) and disclose them for further investigation.

Question 12

How many hours of approved prelicense education must an associate broker applicant complete in New Mexico?

Accepted Answer

Applicants complete three 30-hour courses, 90 hours in all: Principles and Practice, Real Estate Law, and Broker Basics. 120 hours is a qualifying-broker-level figure in the PSI bulletin.

Question 13

A private individual selling her own single-family home may be exempt from the federal Fair Housing Act if she owns no more than three homes and:

Accepted Answer

The single-family owner exemption requires no broker and no discriminatory advertising. Race discrimination is never exempt under the 1866 Civil Rights Act.

Question 14

A party making an offer to buy is the ____, and the party receiving it is the ____.

Accepted Answer

The offeror makes the offer; the offeree receives it. When a counteroffer is made, the roles swap.

Question 15

Federal law requires disclosure of lead-based paint for homes built before:

Accepted Answer

The federal lead-based paint disclosure rule covers housing built before 1978, the year lead paint was banned for residential use.

Question 16

A married couple bought land during the marriage, titled in the husband's name only. The husband signs a deed alone. Under New Mexico law, the deed is:

Accepted Answer

40-3-13 requires both spouses to join in transfers of community real property, and an instrument executed by one spouse in violation is void, subject to written ratification.

Question 17

A CMA prepared by a salesperson to suggest a listing price is:

Accepted Answer

A CMA is an informal estimate of a likely price range based on comparables - not an appraisal, which only a licensed appraiser can perform.

Question 18

Under an open listing, the seller owes a commission to:

Accepted Answer

Open listings are non-exclusive; only the procuring broker is paid, and the owner owes nothing for a self-sale.

Question 19

Lenders commonly prefer a borrower's front-end (housing) ratio not to exceed ___ and back-end (total debt) ratio not to exceed ___ of gross monthly income.

Accepted Answer

Conventional guidelines are 28% for housing expense and 36% for total debt. Reversing them is the common trap.

Question 20

The most common form of homeowner's insurance policy for a single-family home is the:

Accepted Answer

HO-3 (special form) is the most common homeowner's policy. HO-4 is renter's insurance and HO-6 is for condominium owners.

Question 21

Under federal rules, a lender must automatically cancel borrower-paid PMI when the loan balance reaches what percentage of the original value (purchase price)?

Accepted Answer

PMI terminates automatically at 78% LTV based on original value. At 80% LTV the borrower may REQUEST cancellation, which is the tempting distractor.

Question 22

Unless the agreement says otherwise, how often must a property manager give the owner a report of receipts and disbursements?

Accepted Answer

16.61.24.12(A) NMAC requires a monthly report, or as the management agreement requires.

Question 23

What minimum per-claim limit must New Mexico E&O coverage provide?

Accepted Answer

Policies must provide at least $100,000 per claim and $500,000 aggregate. $500,000 is the aggregate, not the per-claim limit.

Question 24

Before offering property management services, a brokerage must:

Accepted Answer

16.61.24.9 and 16.61.23.12 NMAC require a declaration of intent on the Commission's form. New Mexico has no separate manager license or bond.

Question 25

New Mexico water law is based on:

Accepted Answer

New Mexico follows prior appropriation, and the State Engineer issues permits, including domestic well permits under 72-12-1.1.

New Mexico real estate practice test

1. A commercial property has potential gross income of $240,000 and an 8% vacancy allowance. Using a gross income multiplier of 6, what is the estimated value?

2. Acting as an associate broker in New Mexico without a license is classified as:

3. The federal Fair Housing Act (1968) protects all of the following EXCEPT:

4. In a lease, the tenant holds a estate and the landlord holds a .

5. A property is assessed at $200,000 and the tax rate is $2.50 per $100 of assessed value. What is the annual tax?

6. What is the maximum deductible permitted under the required E&O coverage?

7. How often must a broker complete the 4-hour NMREC Core course?

8. A house is L-shaped: one section is 40 ft by 30 ft and the other is 20 ft by 15 ft. At $185 per square foot, what is the estimated cost to build?

9. Which appraiser credential allows appraisal of any type of property, residential or commercial, without a value limit?

10. An associate broker's team name on a postcard is set in 48-point type. What is the minimum type size for the brokerage trade name and phone?

11. During a listing walk-through, the agent notices fresh paint on one ceiling area and a musty odor. The agent should:

12. How many hours of approved prelicense education must an associate broker applicant complete in New Mexico?

13. A private individual selling her own single-family home may be exempt from the federal Fair Housing Act if she owns no more than three homes and:

14. A party making an offer to buy is the , and the party receiving it is the .

15. Federal law requires disclosure of lead-based paint for homes built before:

16. A married couple bought land during the marriage, titled in the husband's name only. The husband signs a deed alone. Under New Mexico law, the deed is:

17. A CMA prepared by a salesperson to suggest a listing price is:

18. Under an open listing, the seller owes a commission to:

19. Lenders commonly prefer a borrower's front-end (housing) ratio not to exceed _ and back-end (total debt) ratio not to exceed _ of gross monthly income.

20. The most common form of homeowner's insurance policy for a single-family home is the:

21. Under federal rules, a lender must automatically cancel borrower-paid PMI when the loan balance reaches what percentage of the original value (purchase price)?

22. Unless the agreement says otherwise, how often must a property manager give the owner a report of receipts and disbursements?

23. What minimum per-claim limit must New Mexico E&O coverage provide?

24. Before offering property management services, a brokerage must:

25. New Mexico water law is based on:

Sources