Property ValuationIntermediateNorth Carolina Exam

The principle of 'progression' in real estate appraisal states that:

AA lower-value property's value is enhanced by proximity to higher-value propertiesCorrect

BA higher-value property's value is diminished by proximity to lower-value properties

CAll properties in a neighborhood appreciate at the same rate

DValue always increases over time

Why A lower-value property's value is enhanced by proximity to higher-value properties Is Correct

Answer A: A lower-value property's value is enhanced by proximity to higher-value properties

The principle of progression holds that a below-average property benefits (increases in value) from being located near higher-value, superior properties.

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

Appraisal

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

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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.

Capitalization Rate (Cap Rate)

A rate used to estimate the value of income-producing property, calculated as Net Operating Income divided by property value.

Comparable Sales (Comps)

Recently sold properties similar in size, condition, and location used by appraisers and agents to estimate a property's market value.

Depreciation

A reduction in the value of an improvement (building) over time due to physical deterioration, functional obsolescence, or external factors.

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