Virginia Real Estate Exam Practice Question
When a lower-quality property is adjacent to a higher-quality property, it can diminish the value of the higher-quality property. What economic principle of value is this?
Correct Answer: D
Rationale: The principle at play is regression, which states that a higher-quality property can lose value when situated next to a lower-quality property. This occurs due to perceived negative externalities, such as decreased desirability and market perception.
Anticipation refers to the expected future benefits of a property, which does not address the impact of adjacent properties. Contribution focuses on how much a feature adds to a property's value, not the effect of neighboring properties. Progression describes the opposite effect, where lower-quality properties gain value from proximity to higher-quality ones, making it inapplicable in this context.
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