Property Valuation
The principle of conformity states that property values are maximized when:
AProperties are unique and distinctive in their neighborhood
BProperties conform to the general character and use of the surrounding neighborhood✓ Correct
CProperties are more expensive than their neighbors
DProperties are the largest in their neighborhood
Explanation
The principle of conformity states that maximum value is achieved when a property conforms to neighboring properties in terms of use, style, and quality. A misfit property (e.
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Key Terms to Know
Comparable Sales (Comps)
Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.
AppraisalA professional estimate of a property's market value prepared by a licensed or certified appraiser.
Capitalization Rate (Cap Rate)A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
Math Concepts
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