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Free NY Real Estate Broker Exam Practice Questions

The broker exam asks what a broker must do when the people under them get it wrong. These ten come from our broker practice exams: fair housing, agency, running an office and more.

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Question 1 · Advanced Fair Housing and Fair Lending

A brokerage's licensees are found to have steered buyers by neighborhood. Who is exposed?
  1. A. The brokerage as well as the individual licensees
  2. B. Only the licensees who dealt with those buyers
  3. C. Only the sellers whose properties were involved
  4. D. Nobody, unless buyers lost money
Show the answer

The answer is A. Fair housing liability reaches the firm through the acts of its licensees, and a pattern is evidence about supervision. Training and policy are what a brokerage has to be able to point to.

  • B is wrong: A firm answers for the conduct of those it supervises.
  • C is wrong: Sellers may be exposed too, and that does not shield the firm.
  • D is wrong: A violation does not require proof of financial loss.

Question 2 · Advanced Fair Housing and Fair Lending

A broker is asked why fair housing law was needed at all. Which practice does the historical record identify as a principal cause of segregated housing patterns?
  1. A. A shortage of building materials in the years after the Second World War
  2. B. Zoning rules that limited how tall a building could be
  3. C. Buyers choosing to live within walking distance of their work
  4. D. Lenders and insurers refusing to serve areas mapped by racial makeup
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The answer is D. Areas were mapped and graded, and the grades tracked who lived there. Lenders and insurers then declined to write in the lowest grades, so owners in those areas could not borrow to buy or improve, and buyers could not get a loan to move in. Racially restrictive covenants did the same work in private deeds. The Civil Rights Act of 1964 and the Fair Housing Act of 1968 were the response to a pattern built deliberately over decades.

  • A is wrong: Materials were short and building was slow, but scarcity did not decide who was allowed to buy where.
  • B is wrong: Height limits shaped how cities look. They are not what closed whole neighborhoods to particular buyers.
  • C is wrong: Where people worked influenced where they looked, but it did not deny them the choice.

Question 3 · Agency Law for Brokers

A salesperson at a brokerage fails to present an offer to the seller. Where does responsibility sit?
  1. A. With the salesperson alone, who handled the offer
  2. B. With the seller, for not asking whether other offers had come in
  3. C. With the broker as well as the salesperson
  4. D. With the buyer's brokerage, for not confirming that it was received
Show the answer

The answer is C. A salesperson acts on the broker's behalf and under the broker's supervision, which is why the salesperson's license carries the broker's name. A failure of that kind reaches the brokerage, and the question a regulator asks is what supervision was in place.

  • A is wrong: Holding a license does not make a salesperson independent of the broker they are associated with.
  • B is wrong: Nothing obliges a client to police whether their own agent is doing the job.
  • D is wrong: The duty to present offers runs from the listing side to its own client.

Question 4 · Agency Law for Brokers

A broker discovers that a salesperson has been quoting commission rates the brokerage does not charge. What is the broker's first duty?
  1. A. Report the salesperson to the Department of State before anything else
  2. B. Wait until a client complains before taking any action
  3. C. Terminate the salesperson immediately without further inquiry
  4. D. Correct it and make sure the affected clients are told
Show the answer

The answer is D. Supervision means finding and fixing the problem, and clients who were given the wrong figure need to be told. Discipline and any report follow from what is found, and neither substitutes for putting the client right.

  • A is wrong: Reporting may follow, and it does not correct what a client has already been told.
  • B is wrong: Waiting for a complaint leaves clients acting on wrong information.
  • C is wrong: Dismissal without inquiry answers neither the facts nor the client's position.

Question 5 · Operating a Real Estate Office

A brokerage treats its salespeople as independent contractors. What must generally be true?
  1. A. That they are supervised as closely as any employee would be
  2. B. That they work only for that brokerage and no other
  3. C. That the brokerage withholds income tax from their commissions
  4. D. A written agreement, pay by commission, and no set hours
Show the answer

The answer is D. The independent contractor treatment rests on a written agreement, substantially all pay tied to output rather than hours, and the licensee controlling how they work. It coexists with the broker's supervisory duty under license law, which is a different question from tax status.

  • A is wrong: Close control over hours and method points toward employment.
  • B is wrong: Exclusivity is a matter for the agreement rather than a condition of the status.
  • C is wrong: Withholding is the mark of employment.

Question 6 · Operating a Real Estate Office

What is the practical difficulty in calling licensees independent contractors?
  1. A. The brokerage cannot then pay them any commission at all
  2. B. They cannot be licensed
  3. C. License law still requires the broker to supervise them
  4. D. The Department of State must approve each such agreement
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The answer is C. Tax status and license law answer different questions. However the agreement is written, Article 12-A still makes the broker answerable for supervising the licensee's real estate activity.

  • A is wrong: Commission is how such licensees are paid.
  • B is wrong: Most licensees in the state work on exactly this basis.
  • D is wrong: No approval of individual agreements is required.

Question 7 · License Law and Supervision

A broker takes on a newly licensed salesperson. What does Article 12-A require of the broker?
  1. A. Supervision of the salesperson's real estate activity
  2. B. Nothing further
  3. C. That the salesperson be paid at least the state minimum wage
  4. D. That the salesperson complete a further course within twelve months
Show the answer

The answer is A. A salesperson may act only under the supervision of the associated broker, which is why the license names that broker. Filing the association is the paperwork; supervising is the obligation.

  • B is wrong: Filing the association records the relationship rather than discharging it.
  • C is wrong: How a licensee is paid is a separate question from license law.
  • D is wrong: Continuing education is on a two-year cycle and is the licensee's own.

Question 8 · Real Estate Finance

Why does a broker advising a seller care whether the buyer's lender sells its loans into the secondary market?
  1. A. It tells you how rigid the underwriting will be
  2. B. It determines who will hold title until the loan is repaid
  3. C. It decides whether the seller may take back a second mortgage
  4. D. It sets the interest rate the buyer will pay after closing
Show the answer

The answer is A. A lender selling into the secondary market must meet Fannie Mae or Freddie Mac standards, so its requirements are fixed and its exceptions few. A portfolio lender keeping the loan can be more flexible, which matters when an appraisal or a condition is tight.

  • B is wrong: New York is a lien theory state; the borrower holds title.
  • C is wrong: Seller financing is a matter for the parties and the first lender's terms.
  • D is wrong: The rate is quoted at the outset rather than set by the sale of the loan.

Question 9 · Real Property Investment

An investor's before-tax cash flow is $48,000 on equity of $600,000. What is the cash-on-cash return?
  1. A. It depends on the depreciation claimed
  2. B. 12.5 percent
  3. C. 0.8 percent
  4. D. 8.0 percent
Show the answer

The answer is D. Cash-on-cash is annual before-tax cash flow divided by the equity invested: $48,000 over $600,000 is 0.08, or 8 percent.

  • A is wrong: Depreciation affects taxable income, not cash flow.
  • B is wrong: That inverts the ratio, dividing the equity by the cash flow.
  • C is wrong: That is a decimal place out.

Question 10 · Transaction Analysis

Two parties are $8,000 apart with everything else agreed. What is the broker's most useful first step?
  1. A. Propose splitting the difference equally between them
  2. B. Find out what each side actually needs from the difference
  3. C. Advise the seller to hold firm because the buyer will move
  4. D. Tell both sides the deal is likely to fail at this point
Show the answer

The answer is B. A gap in price is often a gap about something else: a closing date, a repair, what stays in the house. Establishing what each side is really solving for is what makes a bridge possible.

  • A is wrong: Splitting is one answer among several and skips the diagnosis.
  • C is wrong: Predicting the other side's behavior is not advice a broker can support.
  • D is wrong: Announcing failure to both sides tends to produce it.
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