Property Valuation
The principle of 'regression' in real estate states that:
AProperty values increase over time in improving neighborhoods
BA higher-value property placed among lower-value properties will be pulled down toward the lower values✓ Correct
COverimproving a property increases its value proportionally to the improvement cost
DEconomic downturns reduce property values by a predictable percentage each cycle
Explanation
The principle of regression holds that a superior property among inferior properties tends to decline toward the lower values. This is why appraisers caution against 'overimproving' relative to the neighborhood—the market will not support the cost.
Related California Property Valuation Questions
- In real estate appraisal, what does 'highest and best use' mean?
- The principle of substitution states that:
- The sales comparison approach to property valuation is MOST appropriate when appraising:
- In the cost approach, 'reproduction cost' differs from 'replacement cost' because:
- When adjusting a comparable sale in the sales comparison approach, an appraiser ADDS value to the comparable when the comparable is:
- Which appraisal approach is most appropriate for valuing a special-purpose property such as a church or school with few comparable sales?
- What is 'market value'?
- An appraiser conducting 'paired sales analysis' is attempting to:
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