Property Valuation
What is 'regression' in real estate valuation?
AThe decline in property value due to age and wear
BThe principle that an above-average property in a below-average neighborhood will be pulled down in value by inferior surrounding properties✓ Correct
CA statistical method used to analyze multiple comparable sales
DThe process of calculating depreciation using the straight-line method
Explanation
The principle of regression states that a higher-value property will be adversely affected (pulled down in value) when surrounded by lower-value properties. This is why appraisers select comparables from similar neighborhoods and why buyers typically avoid overbuilding for a given location.
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