Free New Mexico Real Estate Practice Exam Online

Correct answer: A. Agency

Correct. Agency is the fiduciary relationship under which a broker owes these specific duties to their principal.

• B: Puffing is exaggerated, non-factual sales talk and has nothing to do with fiduciary duty.
• C: Steering is the illegal fair housing practice of directing buyers toward or away from areas based on protected class.
• D: Novation is the substitution of a new contract or party for an old one, unrelated to fiduciary duty.

Correct answer: C. Exclusive right to sell listing

Correct. An exclusive right to sell listing entitles the listing broker to a commission no matter who finds the buyer, including the seller.

• A: An open listing lets the seller list with multiple brokers and pay only the one who procures a buyer; the seller keeps the right to sell without owing a commission.
• B: An exclusive agency listing lets the seller sell the property themselves without owing a commission, unlike this scenario.
• D: A net listing sets the seller's minimum proceeds and lets the broker keep anything above that figure as commission; it is not defined by exclusivity.

Correct answer: B. Dual agency

Correct. Dual agency is representation of both parties to the same transaction by the same broker, which most states require informed written consent for.

• A: Subagency occurs when a second broker, not the listing broker, works with the buyer while still representing the seller's interests.
• C: Designated agency is a variation where different licensees within the same firm are each designated to represent only one party.
• D: Ostensible agency (agency by estoppel) arises when a principal's conduct leads a third party to reasonably believe an agency exists, not intentional dual representation.

Correct answer: B. Receives real estate services without an agency relationship

Correct. A customer receives services and is treated honestly and fairly, but has no fiduciary agency relationship with the broker.

• A: That describes a client, who has an agency (fiduciary) relationship formed by written agreement.
• C: Commission payment does not determine client versus customer status; either party can be a customer regardless of who pays.
• D: A customer can be either the buyer or the seller in a transaction, depending on who the broker's client is.

Correct answer: B. Implied agency

Correct. Implied agency arises from the parties' conduct and course of dealing rather than an explicit written or oral agreement.

• A: Ratification occurs when a principal accepts the unauthorized acts of a person who acted as their agent, which is a distinct method of creating agency.
• C: An agency coupled with an interest gives the agent a personal interest in the subject property and generally cannot be revoked by the principal alone.
• D: Universal agency authorizes an agent to handle all matters for the principal, which describes scope of authority, not the method of creation.