Florida Real Estate Broker ExaminationValuation and Market AnalysisHard
A buyer is considering two identical houses in a new subdivision, both listed at $350,000. One house is situated next to a newly constructed, well-maintained public park with walking trails and a playground. The other house backs up to a busy commercial loading dock that operates 24/7. Assuming all other factors are equal, the house next to the park is likely to have a higher value due to which appraisal principle?
- APrinciple of Progression
- BPrinciple of Regression
- CPrinciple of External Obsolescence
- DPrinciple of Contribution
Show answer & explanationAnswer & explanation
Correct answer: A. Principle of Progression
The house next to the park benefits from the positive external amenity, which is an example of the Principle of Progression. This principle states that the value of a property is enhanced by being located among properties of higher value or by positive external factors. Conversely, the house near the loading dock would suffer from the Principle of Regression.
Why the other options are wrong
- B. Regression is when a property's value is negatively affected by lesser-valued properties or negative external factors.
- C. External obsolescence is a form of depreciation, but the question asks for the principle explaining the *higher* value, which is progression, not the depreciation itself.
- D. Contribution relates to the value added by individual property components, not external factors.
Principle of Progression
An appraisal principle stating that the value of a lesser property is enhanced by its proximity to properties of higher value or positive external factors.
- Value 'progresses' upward
- Caused by external positive influences
- Opposite of the Principle of Regression
Memory trick: Progress means moving up, thanks to good neighbors or views.