Property Valuation
The principle of progression in real estate states that:
AHigher-value properties pull down the value of nearby lower-value properties
BA lower-value property is worth more when surrounded by higher-value properties✓ Correct
CProperty values always increase over time
DImprovements always add more value than their cost
Explanation
The principle of progression holds that the value of an inferior property is enhanced by its proximity to superior (higher-value) properties — the opposite of regression.
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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.
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.
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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