Core Valuation Principles Flashcards
7 cards from real SAEE practice questions. Tap to flip, then mark Knew It or Still Learning — missed cards come back until you master them.
Read the first 7 Core Valuation Principles flashcards as text
The principle of increasing and diminishing returns states that adding improvements increases value only until:
Answer: The point where added cost no longer adds proportionate value
Beyond a certain point, additional investment yields less than proportionate value gains.
The principle of competition holds that excess profits in a market tend to:
Answer: Attract competition that reduces those profits
Competition is drawn to high profits, which over time erodes the excess returns.
The principle of change reminds appraisers that value estimates are:
Answer: Valid only as of a specific effective date
Because markets constantly change, an appraised value applies only to its effective date.
Which four-stage cycle describes a neighborhood's typical economic life under the principle of change?
Answer: Growth, stability, decline, revitalization
Neighborhoods typically move through growth, stability, decline, and revitalization.
The principle of supply and demand indicates that when supply rises and demand stays constant, prices generally:
Answer: Fall
An increase in supply relative to steady demand puts downward pressure on prices.
The principle of plottage refers to the increased value resulting from:
Answer: Combining adjacent parcels into one larger, more useful tract
Plottage value arises when assembling adjacent lots creates a more valuable combined parcel.
The process of merging adjacent parcels to create plottage value is called:
Answer: Assemblage
Assemblage is the act of combining parcels, which may produce plottage value.