Which statement correctly describes the principle of conformity as it applies to land and surrounding land uses?
Correct Answer
A) Compatible surrounding uses and reasonable similarity can support value
Conformity concerns compatibility of a property with its surrounding uses and the market benefits of a reasonable degree of similarity. It does not demand identical design or lot size, override legal restrictions or guarantee a value premium in every neighborhood.
Why This Is the Correct Answer
Option A is correct because conformity states that compatible surrounding uses and a reasonable degree of similarity can support value. Maximum value tends to accrue when a reasonable degree of homogeneity is present in the surrounding land uses. The principle implies reasonable similarity rather than monotonous uniformity.
Why the Other Options Are Wrong
Option B: All lots and buildings must be physically identical to have value
Option B, that all lots and buildings must be physically identical to have value, overstates the principle. Conformity calls for reasonable similarity, not monotonous uniformity.
Option C: A higher rent overrides zoning restrictions on the land
Option C, that higher rent overrides zoning restrictions, is wrong because legal restrictions limit permitted uses regardless of rent. This statement also describes nothing about conformity.
Option D: An unusual property has little or no market value in the area
Option D, that an unusual property has little or no market value, goes too far. A nonconforming property may suffer some loss of value, but it still has market value.
Fit in, not identical
Conformity rewards properties that fit in with their surroundings, without requiring them to be identical.
How to use: Use this phrase to reject answer choices that demand identical properties.
Exam Tip
Choose answers describing reasonable similarity or compatibility; reject choices requiring identical properties or claiming nonconforming properties have no value.
Common Mistakes to Avoid
- -Believing conformity requires identical homes
- -Thinking an unusual property has no market value
- -Confusing conformity with progression or regression
Concept Deep Dive
Analysis
This question tests the principle of conformity. Conformity holds that value tends to be maximized when a reasonable degree of homogeneity exists among surrounding uses. The key nuance is reasonable similarity and compatibility, not identical properties.
Background Knowledge
The principle of conformity holds that maximum value accrues when a reasonable degree of homogeneity is present in the neighborhood or surrounding land uses. It recognizes economic and psychological benefits from grouping similar uses. Related principles include progression and regression, which describe how dissimilar properties are affected by their neighbors.
Real-World Application
In a subdivision of similar single-family homes, a proposed industrial use would be incompatible. The appraiser notes that the neighborhood's consistent residential character supports values, consistent with the principle of conformity.
More Land/Site Questions
How should an appraiser account for a site's access to public sewer compared with competing sites that require septic systems?
Which fact, if supported by competitive-market evidence, most directly supports a unit-price premium for an otherwise comparable site?
A rectangular site's frontage is doubled while its depth is halved, keeping area constant. What is the likely value effect in a retail district?
A downtown site's zoning height limit is reduced from six stories to three. Buyers in this market had been paying for six-story development potential. What effect on land value is most supportable?
A zoning change increases permitted density from four to eight units per acre. What is the likely effect on site value?
Using the allocation method, market evidence supports a typical land-to-total-property-value ratio of 28% for similar improved properties in the subject’s location. An improved comparable sold for $825,000. What land (site) contribution is indicated by applying that ratio?
An appraiser is valuing a vacant site near a landfill. A similar vacant site that is not affected by the landfill sold for $480,000. Paired land sales indicate that proximity to the landfill lowers site prices by $70,000. No other adjustments apply. What is the indicated value of the subject site?
An appraiser is extracting site value from a $600,000 cash sale. The seller's records show an original construction cost of $250,000 and a depreciated book value of $110,000. The appraiser estimates current replacement cost new at $400,000 and accrued depreciation from all causes at $100,000. What is the indicated site value?
Three parcels assembled under single ownership (standard appraisal guidance assemblage) support separate as-is values of $290,000, $340,000, and $250,000. After assemblage for a higher-utility use, the combined site is valued at $1,050,000. Assemblage costs (demolition, legal, holding, and related) total $55,000. What is the indicated net plottage (plottage increment after assemblage costs)?
A comparable commercial site with 65 front feet sold for a cash-equivalent price of $585,000. Per standard appraisal guidance, sale price per front foot is a vacant-land unit of comparison when frontage is a primary value determinant. The subject site has 72 front feet and is otherwise similar. What indicated land value does the front-foot unit support before other adjustments?
People Also Study
Real Estate Market
13.6% of exam
Property Description
11.8% of exam
Sales Comparison Approach
16.4% of exam
Cost Approach
13.6% of exam
Income Approach
8.2% of exam
Previous Question
A parcel is held vacant awaiting a planned highway interchange. How is this best described?
Next Question
Two hypothetical projects have identical cost cash flows and identical positive net sale receipts. One receives each sale receipt earlier and finishes in three years; the other finishes in six. Use the same positive discount rate and identical risk. Which has the higher present residual for land?