Humber/Ontario Real Estate Course 3 Exam Practice

Which principle of property value applies when a buyer views the smallest house on the street as the best purchase?

1. Conformity

2. Progression

3. Regression

4. Competition

5. External Factors

6. Market Comparison

The correct answer is: Progression

The principle of progression is applicable in this scenario because it refers to the situation where a property of lesser value benefits from the higher values of surrounding properties. In this case, the smallest house on the street may be seen as the best purchase due to its proximity to larger, more expensive homes. This principle suggests that the smaller house may appreciate in value simply because it is located in an area with higher-priced properties, allowing buyers to perceive it as a good investment. This contrasts with the principle of regression, where a property of higher value is diminished in value due to being situated among lesser-valued properties. The aspects of conformity and competition do not apply here as directly, since they focus more on how properties relate to market expectations and market dynamics rather than the inherent value influenced by surrounding properties. External factors and market comparison involve broader influences and comparisons but do not specifically capture the essence of why a buyer might find value in the smallest house relative to others in the neighborhood.