Property Valuation
Regression in appraisal holds that the value of a superior property is:
AIncreased by proximity to less valuable properties
BDecreased by proximity to less valuable properties✓ Correct
CUnaffected by neighboring properties
DDetermined solely by its own characteristics
Explanation
The principle of regression states that the value of a higher-quality property is adversely affected (pulled down) by neighboring lower-quality properties—an important consideration in Massachusetts neighborhood analysis.
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Key Terms to Know
Appraisal
A professional estimate of a property's market value prepared by a licensed or certified appraiser.
Comparable Sales (Comps)Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
Private Mortgage Insurance (PMI)Insurance required by lenders on conventional loans with less than 20% down payment, protecting the lender — not the borrower — against default.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
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