Certified Residential Appraiser Practice Exam

What does the principle of conformity express?

1. Value is highest when properties are similar in nature

2. Value is generated through new developments only

3. Value is based on individual property uniqueness

4. Value decreases with over-improvements of properties

The correct answer is: Value is highest when properties are similar in nature

The principle of conformity states that the maximum value of a property is achieved when it is similar in nature to other properties in the surrounding area. This principle is rooted in the idea that properties that are homogenous with respect to their use, size, design, and quality will generally be more desirable and command higher prices in the market. Buyers tend to prefer homes that are consistent with the character of the neighborhood, which reinforces property values and community identity. Thus, when properties exhibit conformity, they promote stability in the market and can enhance the perceived desirability of both individual properties and the neighborhood as a whole. The other options illustrate concepts that do not reflect the principle of conformity. For instance, the notion that value is generated solely through new developments overlooks the importance of established properties and their contributions to overall neighborhood value. Similarly, emphasizing individual property uniqueness contradicts the idea of conformity, which relies on similarity rather than uniqueness. Lastly, while over-improvements can impact value, this is a separate consideration from the fundamental aspect of how conformity contributes to achieving maximum property value within a certain area.