Property Valuation
In Oregon, what is the 'principle of balance' in real estate valuation?
AThe balance between supply and demand determining price
BThe principle that maximum value is achieved when the four agents of production (land, labor, capital, coordination) are in proper proportion for the use✓ Correct
CThe principle requiring appraisers to balance multiple approaches
DOregon's requirement that property taxes be balanced between homeowners and businesses
Explanation
The principle of balance (or contribution) states that maximum value is achieved when the four agents of production — land, labor, capital, and entrepreneurial coordination — are combined in the proper proportions for the property's use. Overimprovement (too much capital relative to the land value) or underimprovement can reduce overall property value by upsetting this balance.
Related Oregon Property Valuation Questions
- In Oregon, which of the following BEST describes a 'market value' appraisal?
- What is a 'broker price opinion' (BPO) and how does it differ from a formal appraisal in Oregon?
- In Oregon, which appraisal approach is typically given the MOST weight for vacant land?
- What is a 'market rent' study and how does it relate to Oregon property management and appraisal?
- An Oregon appraiser is using the sales comparison approach and needs to adjust for a comparable that has a garage while the subject property does not. What type of adjustment should the appraiser make to the comparable?
- What is the 'gross income multiplier' (GIM) as distinct from the 'gross rent multiplier' (GRM)?
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