Property Valuation
Which principle of value states that the value of a lesser property is pulled up by surrounding superior properties?
ARegression
BProgression✓ Correct
CConformity
DContribution
Explanation
The principle of progression holds that a lower-valued property surrounded by higher-valued properties will have its value pulled upward. The opposite — a superior property surrounded by inferior ones — is 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.
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.
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