Property ValuationIntermediateCalifornia Exam

Under the principle of conformity, property values are maximized when:

AA property has unique features not found in the neighborhood

BProperties in a neighborhood are reasonably similar in size, style, and useCorrect

CA single property is significantly superior to all others on the block

DLand use is mixed with retail and residential combined

Why Properties in a neighborhood are reasonably similar in size, style, and use Is Correct

Answer B: Properties in a neighborhood are reasonably similar in size, style, and use

The principle of conformity holds that property values are highest when improvements are in harmony with their surroundings. Neighborhoods where homes are similar in character tend to maintain and support property values better than those with significant variation.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

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Key Terms to Know

Adjustable-Rate Mortgage (ARM)

A mortgage with an interest rate that changes periodically based on a financial index, usually after an initial fixed-rate period.

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

Fiduciary Duty

The highest legal duty an agent owes to a principal — requiring the agent to act in the principal's best interest above all others.

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

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Property Valuation Guide

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