Property Valuation
Regression in real estate valuation means that:
AProperty values decline over time as buildings age
BA higher-value property's value is pulled down by proximity to lower-value properties✓ Correct
CA lower-value property is enhanced by proximity to higher-value properties
DMarket values return to previous levels after a downturn
Explanation
The principle of regression states that a higher-quality property located among lower-quality properties will experience a decrease in its value due to the negative influence of the surrounding properties.
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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.
Gross Rent Multiplier (GRM)A quick valuation metric for income properties calculated by dividing the property price by gross annual rental income.
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.
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