Minnesota State Real Estate Practice Test

According to the principle of progression, a home is most likely to sell for a higher price in a neighborhood with what?

1. Smaller homes

2. Mixed property types

3. Older homes

4. Larger homes

The correct answer is: Larger homes

The principle of progression suggests that a home is likely to sell for a higher price when it is situated in a neighborhood where larger homes are present. This principle is rooted in the idea that the values of properties are influenced by the surrounding properties. If a home is located in an area with larger, more expensive homes, it tends to benefit from the higher overall market values of those homes. This is because potential buyers may perceive the neighborhood as more desirable, leading them to be willing to pay more for a property situated among larger homes that have higher market values. In contrast, homes in neighborhoods with smaller, less expensive homes may be negatively impacted, as their value is more closely aligned with the lower-priced properties around them. Similarly, mixed property types or older homes might not consistently support a higher price due to their varying characteristics and potential limitations in appeal and functionality compared to larger, newer homes. Thus, the presence of larger homes tends to elevate the perceived value of surrounding properties, supporting the principle of progression.