New York Real Estate Salesperson ExaminationValuation and Market AnalysisEasy
Which principle of value suggests that a property's value is maximized when it conforms to the standards of the neighborhood?
- APrinciple of Contribution
- BPrinciple of Conformity
- CPrinciple of Anticipation
- DPrinciple of Progression
Show answer & explanationAnswer & explanation
Correct answer: B. Principle of Conformity
The Principle of Conformity states that maximum value is realized when a property is in harmony with its surroundings. Properties that are significantly over-improved or under-improved for an area tend to suffer a loss in value.
Why the other options are wrong
- A. Contribution relates to the value an improvement adds to the overall property.
- C. Anticipation relates to future benefits or detriments affecting value.
- D. Progression states that a lower-valued property gains value by being near higher-valued ones.
Principle of Conformity
An appraisal principle stating that a property's value is maximized when it is in harmony with its surroundings and conforms to neighborhood standards.
- Properties that don't conform may suffer value loss (over-improvement or under-improvement).
- Related to homogeneity in design, size, and utility.
- Helps maintain neighborhood stability.
Memory trick: Value's Principles: CA(P) CON(T) SUB.