Property ValuationIntermediateNorth Carolina Exam

The principle of conformity in real estate value states that:

AAll homes in a subdivision must have the same floor plan

BMaximum value is achieved when properties in an area are similar in use, style, and qualityCorrect

CProperties must conform to zoning before they can be appraised, according to common practice

DAppraisers must use only standard forms

Why Maximum value is achieved when properties in an area are similar in use, style, and quality Is Correct

Answer B: Maximum value is achieved when properties in an area are similar in use, style, and quality

The principle of conformity holds that a property achieves maximum value when it is in conformity with surrounding properties in terms of use, design, and quality.

Exam Tip: Property Valuation

Valuation questions focus on the three approaches to value: sales comparison, cost, and income. Know which approach is best for which property type. The income approach uses cap rate and NOI — memorize these formulas.

Key Property Valuation Terms in This Question

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

People Also Study

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.

Zoning

Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.

Loan-to-Value Ratio (LTV)

The ratio of a mortgage loan amount to the appraised value or purchase price of a property, expressed as a percentage.

Appraisal

A professional estimate of a property's market value prepared by a licensed or certified appraiser.

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