Freehold
Valuation & Market Analysis term
The principle that a higher-value property loses value from proximity to lower-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
An investor pays a premium price for a vacant lot today because she expects the surrounding area to be rezoned for commercial use next year. This decision reflects the principle of:
Anticipation — The principle of anticipation holds that value is created by the expectation of future benefits, such as anticipated rezoning, income, or appreciation.
Source: PSI National Real Estate Exam Content Outline §3 Valuation & Market Analysis
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