Property Valuation
The principle of conformity in real estate value states that:
AAll properties in a neighborhood must be identical
BMaximum value is achieved when properties conform to the surrounding neighborhood in use, size, and style✓ Correct
CNonconforming properties are worthless
DProperties must comply with all zoning regulations to have value
Explanation
The principle of conformity holds that value is maximized when a property's use, size, and style conform to the neighborhood. A mansion in a modest neighborhood or a commercial building in a residential area may suffer in value due to lack of conformity.
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Key Terms to Know
Zoning
Local government regulations that control land use by dividing areas into zones specifying permitted uses, building sizes, and densities.
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.
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