What principle states that a lower-quality property gains value when it is near a higher-quality property?

Prepare for the Alabama Post-License Salesperson Exam. Utilize flashcards and multiple choice questions with hints and explanations. Ensure your success on the exam day.

The principle that a lower-quality property gains value when it is located near a higher-quality property is known as progression. This concept is rooted in the idea that properties of lesser value can benefit from their proximity to more desirable, high-quality properties. When better homes are nearby, buyers may be willing to pay more for a lower-quality property simply because it is located in a favorable area. Thus, the overall impression of the neighborhood can enhance the value of the lesser-quality property.

In contrast, regression addresses how a higher-quality property can lose value when it is situated near lower-quality properties, demonstrating the influence that surrounding properties have on value. Conformity refers to the principle that properties in a neighborhood are most valuable when they conform to the standards of the area, while substitution deals with the idea that a buyer will not pay more for a property than they would for an alternative that offers similar utility. Understanding progression helps real estate professionals recognize how neighborhood dynamics can affect property values.

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