Property Valuation
The principle of progression in real estate valuation means:
AProperty values increase over time due to inflation
BA lower-value property may benefit from being surrounded by higher-value properties✓ Correct
CProperty values follow a predictable life cycle
DRenovation costs add proportionally to a property's value
Explanation
The principle of progression states that the value of a lesser property is enhanced (pulled upward) by proximity to higher-value properties. Conversely, the principle of regression states that a superior property's value is pulled down by surrounding inferior properties.
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Key Terms to Know
Gross Rent Multiplier (GRM)
A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
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