Freehold
Valuation & Market Analysis term
The principle that a lesser-value property gains value from proximity to higher-value properties.
This term belongs to Valuation & Market Analysis. The questions below are real items from Freehold's bank that use it - each one cites its source.
Every Freehold question shows why the right answer is right — and cites its source.
A modest, older home located among much larger and more expensive homes tends to be pulled upward in value because of its surroundings. This illustrates the principle of:
Progression — The principle of progression holds that the value of a lesser-quality property is enhanced by its proximity to properties of higher value.
Source: PSI National Real Estate Exam Content Outline §3 Valuation & Market Analysis
A large, high-end home built among much smaller, lower-valued homes tends to suffer a loss in value because of its surroundings. This illustrates the principle of:
Regression — The principle of regression holds that the value of a superior property is adversely affected by the presence of nearby, lower-valued properties.
Source: PSI National Real Estate Exam Content Outline §3 Valuation & Market Analysis
A homeowner spends $35,000 installing an in-ground swimming pool, but an appraisal shows the pool adds only $12,000 to the home's market value. This illustrates the principle of:
Contribution — The principle of contribution states that the value of an improvement is measured by how much it adds to overall property value, not by what it cost to install.
Source: PSI National Real Estate Exam Content Outline §3 Valuation & Market Analysis
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