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
Under the principle of substitution, what is the maximum value a buyer will pay for a property?
Answer: The cost of acquiring an equally desirable substitute
Substitution holds that a buyer pays no more than the cost of an equally desirable alternative.
The principle of anticipation states that value is based on what?
Answer: Expected future benefits of ownership
Anticipation links value to the present worth of future benefits an owner expects to receive.
Which principle explains why an oversized luxury home in a modest neighborhood may not recover its full cost?
Answer: Regression
Regression holds that a superior property's value is pulled down by surrounding lesser-valued properties.
A modest home located among larger, more expensive homes tends to benefit from which principle?
Answer: Progression
Progression raises a lesser property's value due to its association with higher-valued neighbors.
The principle of contribution measures value by what standard?
Answer: The amount a component adds to overall property value
Contribution evaluates an improvement by the value it adds, not its cost.
The principle of conformity suggests maximum value is achieved when a property does what?
Answer: Reasonably matches the surrounding area's use and style
Conformity holds that properties reach peak value when they are similar in use and character to nearby properties.
Which principle states that value is created and sustained when supply and demand are in balance with a property's use?
Answer: Balance
The principle of balance holds that value is maximized when factors of production and land use are in equilibrium.