Property Valuation
In New Mexico, the 'principle of regression' in appraisal holds that:
AOlder properties are always worth less than newer ones
BA higher-value property is negatively affected when located among lower-value properties✓ Correct
CMarket values always decrease over time
DLarger properties are always more valuable
Explanation
The principle of regression holds that a property's value is diminished when it is surrounded by properties of lesser value or quality. Conversely, the principle of progression holds that a lower-value property benefits from being near higher-value properties.
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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.
DepreciationA reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.
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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