Property Valuation
If a home in a neighborhood of $200,000 houses is improved with a $100,000 addition, its value will likely:
AIncrease by exactly $100,000
BIncrease by less than $100,000 due to the principle of regression✓ Correct
CIncrease by more than $100,000 due to the principle of progression
DNot change because the addition only adds square footage
Explanation
The principle of regression holds that a property of higher quality or value than its neighbors suffers reduced value due to the inferior surrounding properties. Adding $100,000 to a $200,000 home in a $200,000 neighborhood will likely not return $100,000 in added value.
Related Arkansas Property Valuation Questions
- The leasehold interest represents:
- Depreciation in appraisal refers to:
- Economic life of an improvement refers to:
- Functional obsolescence in a property is caused by:
- The principle of substitution states that a buyer will not pay more for a property than:
- The principle of anticipation holds that value is determined by:
- The cost approach to value is MOST appropriate for appraising:
- In the cost approach, land is always valued separately using:
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