Property Valuation
The principle of conformity in Utah real estate suggests that:
AAll homes in a subdivision should be identical
BProperty values are maximized when properties are similar and compatible with surrounding uses✓ Correct
CHomes must conform to county building codes to be sold
DAppraisals must conform to government standards
Explanation
The principle of conformity holds that value is maintained and maximized when a property is similar in use, style, and quality to its neighbors. Non-conforming properties (over-improvements or under-improvements) may lose value.
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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.
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.
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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