A modest home located among much more expensive homes tends to benefit in value from its surroundings. Which principle is this?
Correct Answer
A) Progression
Progression: lower-value homes tend to benefit when near higher-value homes. Regression is the opposite effect on the superior property, and conformity concerns reasonable homogeneity.
Why This Is the Correct Answer
Option A is correct because the principle of progression holds that lower-value homes tend to benefit or increase in value when in proximity to higher-value homes. A modest home among more expensive homes fits this exactly.
Why the Other Options Are Wrong
Option B: Regression
Option B, regression, is the opposite effect: a higher-value property tends to lose value when surrounded by lower-value properties. The scenario describes a modest home gaining value, not a superior one losing it.
Option C: Conformity
Option C, conformity, holds that value is maximized when properties are reasonably similar to their surroundings. It does not specifically describe a lesser home benefiting from superior neighbors.
Option D: Contribution
Option D, contribution, concerns how much a component adds to overall value compared with its cost. It does not address the effect of surrounding homes on a property's value.
Progress up, regress down
Progression moves the lesser home up toward its neighbors; regression pulls the better home down toward its neighbors.
How to use: Use this direction cue to decide which principle a scenario describes.
Exam Tip
Identify which property is affected, the lesser or the superior one, and the direction of the value effect before choosing.
Common Mistakes to Avoid
- -Mixing up progression and regression
- -Choosing conformity for any neighborhood-fit question
- -Confusing contribution with neighborhood influence
Concept Deep Dive
Analysis
This question tests distinguishing progression from regression. Progression describes a lower-value property gaining value from nearby higher-value properties. Regression is the reverse, where a superior property loses value among inferior ones.
Background Knowledge
Progression and regression are paired principles describing how surrounding properties affect value. Both relate to conformity, which says value tends to be greatest when properties are reasonably similar. Appraisers consider these effects when the subject differs markedly from its neighborhood.
Real-World Application
A small older cottage sits in a street of large, newer homes. Its sale price is higher than similar cottages in a modest area, which the appraiser explains through the principle of progression.
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