Property Valuation
What is the principle of progression and regression in real estate value?
AProperty values always progress over time
BProgression: a lower-value property benefits from neighboring higher-value properties; regression: a higher-value property is pulled down by lower-value surroundings✓ Correct
CValue regresses with age
DProperties progress in value until they regress
Explanation
The principle of progression holds that lower-value properties benefit from being surrounded by higher-value properties. Regression means higher-value properties are diminished in value by lower-value surroundings.
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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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