Which of the following best describes the principle of progression?
Correct Answer
A) A modest property's value is enhanced by association with better properties
Why this is correct: The principle of progression holds that a lower-value property benefits from being near higher-value properties. Its value is "pulled up" by the superior neighborhood. Why the other choices are wrong: "Property improvements should progress from most to least important" describes construction sequencing, not a valuation principle. "Market conditions progress through predictable cycles" refers to market cycles, not progression. "Property values increase over time due to inflation" describes appreciation, not the principle of progression. Exam tip: Progression = a lesser property gains value from better neighbors. Regression = a better property loses value from lesser neighbors.
Why This Is the Correct Answer
The principle of progression describes how a relatively modest property may receive value support from surrounding properties of higher quality or value, subject to actual market evidence.
More Market Questions
A property has $150,000 potential gross income, 5% vacancy and collection loss, and $50,000 operating expenses. If a market-derived effective gross income multiplier (EGIM) is 8.5, what value is indicated?
A property generates $85,000 in Net Operating Income and sells for $1,062,500. What is the overall capitalization rate?
A property has potential gross income of $180,000, vacancy and collection loss of $15,000, and operating expenses of $65,000. What is the Net Operating Income?
A comparable sale occurred 8 months ago for $425,000. Market analysis supports a simple, non-compounded market conditions adjustment of 0.5% of the original sale price per month. What is the adjusted sale price?
The economic characteristic of real property known as 'situs' refers to:
A property generates $150,000 in potential gross income. Market data indicates a 7% vacancy rate and operating expenses of 35% of effective gross income. If the cap rate is 9.5%, what is the indicated value?
A building's gross rent multiplier (GRM) is 120. If the monthly rent is $2,500, what is the indicated value?
A commercial building cost $2,500,000 to construct. The land value is $600,000. For this simplified calculation, apply 15% physical deterioration to building cost first, then apply 8% functional obsolescence to the remaining building amount. What is the depreciated cost of the improvements?
In the cost approach, economic obsolescence is characterized as:
The concept of regression in property values means that:
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