Real estate glossary and exam guide
Progression: how surrounding properties can support a modest home’s value
A modest home stands among larger, more valuable homes of the same type. Buyers may recognise value in that setting, but the small home does not acquire the neighbors’ extra rooms or their entire sale prices. That distinction is the starting point for a progression question.
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The short answer
The principle of progression describes the upward value influence that a lower-valued property can receive through association with superior properties of the same type in the same area. It is a market tendency to investigate, not a fixed percentage or a promise that prices will rise over time. The property can benefit in its present condition without renovation. Its actual rights, utility, condition and competitive market still matter, and any measured effect needs evidence.
Reviewed October 27, 2026. PSI includes economic principles of value within national III, Valuation. The whole broker Valuation domain has eight scored questions, without a promised progression quota. The definitions and supplied cases here teach the principle; the cited current Fannie Mae topics illustrate their own appraisal-program context. They do not turn a glossary lesson into an appraisal, a renovation recommendation or loan approval.
Identify the influence, then test its support
- Name the property receiving the influence. Progression concerns the relatively lesser property benefiting from superior properties of the same type in the area. Regression describes the downward influence on the relatively superior property from lesser surrounding properties. Identify the subject and the direction before choosing the term; a large nearby sale alone does not establish either effect.
- Describe the setting with property facts. Verify use, rights, site characteristics, access, structures, condition, amenities and relevant market activity. Describe what is present and how it affects competition rather than calling an area good, poor or desirable without support. Protected-class identity and coded substitutes for it are not valuation evidence. Different uses or building styles do not automatically make a setting unacceptable.
- Find the relevant competition. Use properties appealing to the same likely participants with relevant physical and legal characteristics. The nearest mansion may explain context without being a good substitute for a modest home. A properly supported sale farther away can be more informative. Read the cited comparable-selection requirements in context; no universal mile radius or automatic requirement to pick the highest nearby sale follows from progression.
- Keep present influence separate from a proposed project. A home need not be enlarged or renovated to receive a supported location or surrounding-property benefit. Calling it modest also does not prove it is under-improved in the highest-and-best-use sense or poorly maintained. A well-kept small house can meet market needs. Test a proposed change separately instead of requiring a project to explain an as-is influence.
- Use comparable evidence without inventing a progression rate. Verify transaction terms, effective dates, property differences and market reaction. An adjusted comparison can help isolate a location-related effect when the supplied evidence supports it. An observed price gap without that work may reflect size, condition, rights, concessions or market timing. Do not add a second progression percentage when the relevant influence is already reflected in the comparable indications.
- Distinguish influence from a rise over time. A relative benefit can remain even when the property’s absolute value falls during a market decline. For this lesson, compare market appreciation on a consistent property and rights basis; the glossary’s appreciation definition distinguishes it from additions and betterments. A higher value after remodeling does not, by itself, isolate a market appreciation rate or prove progression caused the change.
- Test any improvement or redevelopment on its own merits. Highest and best use requires legal permissibility, physical possibility, financial feasibility and maximum productivity, considering the site as vacant and the property as improved. Existing improvements can remain appropriate until removal or renovation is financially supported. Nearby development is not a permit, and larger gross project receipts do not establish a better net use.
- Keep the arithmetic on a consistent basis. A renovation comparison needs acquisition and all relevant project costs, timing, risk and required return. Cost and contribution are different. When comparing continued use with a redevelopment residual, identify the same property interest and make clear which costs have already been allowed. Do not add the value of a removed building to a residual that already accounts for removal, or mix a land use with incompatible improvement assumptions.
- Reconcile the evidence rather than forcing a slogan. The most common neighborhood price is not automatically the subject’s value, and an atypical improvement is not automatically worthless or disqualifying for a loan. Use supported contribution, relevant comparable evidence and reasoned reconciliation. The current Illinois standards incorporation and the public Foundation materials must be read on their own terms; the older teaching chapter is not current Illinois licensing or USPAP authority.
| Fact pattern | Concept or next step | Limit |
|---|---|---|
| Lesser property benefits from superior same-type surroundings | Progression | No guaranteed percentage or equality |
| Superior property suffers a supported effect from lesser surroundings | Regression | Not statistical regression or ordinary physical wear |
| Unchanged property rises in value over a stated period | Examine market appreciation | Isolate time from added improvements and changed rights |
| Small well-kept home fits its current market | Analyse its actual use and demand | Small does not automatically mean under-improved |
| Large next-door sale serves another buyer segment | Context, with direct comparability still to test | Nearest does not automatically mean best |
| Renovation costs exceed the supported contribution | Contribution and feasibility issue | No automatic tax or completed-sale loss |
| Higher-density development exists nearby | Check this site’s rights and feasible alternatives | Nearby construction is not approval for the subject |
| A local price occurs most often | Predominant price under the cited program terminology | Not the arithmetic mean or automatic subject appraisal |
The distinctions that matter
| Distinction | How it works | What to notice |
|---|---|---|
| Progression and regression | Progression concerns upward influence on the relatively lesser property; regression concerns downward influence on the relatively superior one. | Identify whose value is affected and in which direction. |
| Progression and market appreciation | Progression describes a relative association; market appreciation concerns a supported increase over time on a consistent comparison basis. | A relative benefit can coexist with an absolute decline. |
| Modest size and under-improvement | A small home can serve its market well; a claim of under-improvement needs use and feasibility analysis. | Size alone does not establish a need to build more. |
| Present influence and renovation potential | Surrounding-property influence can exist without changing the home. | Do not make future construction a prerequisite for every progression example. |
| Proximity and comparability | Distance is one fact; useful competition also depends on rights, features and likely participants. | The mansion next door is not automatically the best comparable. |
| Cost and contribution | Expenditure can differ from a feature’s supported contribution to the whole. | An expensive addition does not recover its cost by definition. |
| Predominant price and subject value | The cited Fannie topic uses predominant for the most common price, with its stated reporting context. | Neither a mean nor a mandatory price for every house follows. |
| Compatible uses and resident identity | Conformity concerns relevant improvements and land uses, not protected-class sameness among residents. | Describe property facts without protected-characteristic assumptions. |
| Residual value and double counting | A supported residual already reflects the specified costs and use assumptions. | Do not add back a removed improvement or count the same location influence twice. |
Work through the facts
A supported influence without an addition
Assume credible analysis of verified competitive sales isolates the surrounding-property influence: a modest, unchanged home has a $320,000 indication in the described same-type setting, versus $280,000 for an otherwise equivalent comparison without that influence. Relevant other differences have already been accounted for.
- The expressly isolated illustration difference is $320,000 − $280,000 = $40,000.
- No remodeling is required by the stated facts.
Answer: The supplied $40,000 illustrates an upward contextual influence. It is not a universal adjustment, a causal conclusion from one unadjusted sale pair, or a new property’s appraisal.
The farther modest sale can be more useful
A 6,000-square-foot mansion adjoins a 1,500-square-foot home. Assume a verified 1,600-square-foot sale one mile away competes for the same likely participants, and analysis supports its use after relevant location and other differences are considered.
- The mansion’s size, quality and segment can make it a weak direct substitute.
- The farther sale’s usefulness comes from supported competition and analysis, not from a rule that one mile is always acceptable.
Answer: Distinguish surrounding context from comparable selection. Do not apply the mansion’s price per square foot or price directly to the smaller subject.
A positive spread misses the supplied return target
Assume supported after-renovation gross sale receipts (before selling costs) of $700,000, acquisition at $480,000 and a complete $210,000 allowance for every relevant nonacquisition project outlay, including the stipulated financing, carrying, selling and contingency items. The investor separately requires a $40,000 residual return for this stated timing and risk; it has not already been deducted in the $210,000.
- Before the required return, total outlays are $480,000 + $210,000 = $690,000.
- The residual is $10,000, which is $30,000 below the supplied $40,000 requirement.
Answer: The plan does not meet that stated return criterion. A positive spread is not the same as adequate reward; these hypothetical figures neither authorize the project nor predict a real investor’s result.
The small lot cannot support the proposed addition
Assume the subject’s actual lot dimensions and applicable setbacks prevent a proposed expansion, while a supported present location benefit remains. No variance or other approval has been granted.
- The subject’s present benefit and the proposed expansion are separate issues.
- Larger adjacent lots do not supply rights the subject lacks.
Answer: Do not price the forbidden expansion as already available. Any supported as-is contextual benefit must still be evaluated on the subject’s actual rights and utility.
Small does not mean neglected
A well-maintained smaller house serves an identified market segment. There is no evidence that expansion would be legally possible, financially supported or the most productive feasible use.
- Condition and relative size answer different questions.
- No supplied evidence establishes deferred maintenance or an economically justified larger improvement.
Answer: Calling the home modest does not prove neglect, under-improvement or a need for renovation. Progression concerns a supported influence, not an instruction to enlarge every small house.
A relative benefit during an absolute decline
On a consistent rights and condition basis, assume the subject’s value was $420,000 last year and is $399,000 now. At the current date, credible supplied analysis supports $370,000 for an otherwise equivalent comparison without the identified surrounding-property benefit.
- The subject’s time change is $399,000 − $420,000 = −$21,000, or −5%.
- The separate current relative difference is $399,000 − $370,000 = $29,000.
Answer: The stated positive relative influence can coexist with a 5% absolute decline. The two comparisons use different baselines and must not be combined into a fictitious appreciation rate.
Improvement spending does not establish contribution
A proposed feature costs $150,000. Assume credible analysis supports only $60,000 of contribution to the whole property under the supplied conditions, with no other value change.
- The stipulated contribution is $60,000.
- The cost-contribution gap is $150,000 − $60,000 = $90,000.
Answer: The feature does not gain an additional $90,000 of contribution merely because larger homes are nearby. The gap alone is not a tax deduction, a realized sale loss or the value of the entire property.
Compare a consistent redevelopment residual
Assume continued use supports $440,000 for the existing property interest. A legally permitted, physically possible alternative has credible demand and financial-feasibility support. Its $470,000 residual for that same existing interest is after all relevant nonland removal, development, timing, risk and required-return allowances, but before acquiring the existing interest. Removal of the current cottage is already allowed for.
- The net alternative exceeds continued use by $30,000.
- The residual does not leave the cottage standing; adding its former value would mix incompatible assumptions and count it again.
Answer: Under these express assumptions, the alternative has the higher supported net result. This does not establish actual zoning, demolition approval or a value from a gross completed-project sales total.
Predominant is the most common, not the mean
For a terminology exercise only, use these supplied observations: $380,000, $400,000, $400,000, $420,000 and an isolated $700,000 extreme. They do not constitute a complete real neighborhood study.
- The most frequently occurring amount in the supplied set is $400,000.
- The arithmetic mean of all five observations would be $460,000, which is a different statistic.
- The cited Fannie topic separately says to exclude isolated high and low extremes from the reported price range.
Answer: The supplied most-common amount is $400,000. Neither that statistic nor the mean automatically sets the subject’s value. Follow the actual program’s data and reporting requirements rather than treating five teaching numbers as a completed neighborhood analysis.
Atypical does not mean worthless or automatically ineligible
An improvement is larger or costlier than typical for its neighborhood. Assume market evidence shows that it contributes some value, but less than its expenditure. The subject’s supported value is above the local predominant price. No complete lending-eligibility file is supplied.
- The cited neighborhood topic requires analysis of the over-improvement and its supported contribution.
- The predominant price is not an automatic ceiling for every house.
- The topic does not make every over-improvement automatically ineligible.
Answer: Use the supported contribution and actual program requirements. Do not force the property down to the predominant price, assign zero solely because the feature is atypical, or promise loan approval.
Mistakes to avoid
- A modest house becomes worth the same as the largest neighbor. The subject retains its own size, rights, condition and utility.
- Progression requires construction first. A supported surrounding influence can affect the home in its existing condition.
- Every smaller home is under-improved. Test actual use, market needs and feasible alternatives.
- A positive relative influence proves annual appreciation. Compare the effective dates and baselines; absolute value can still decline.
- Every price gap is a progression adjustment. Verify and account for other relevant differences and market reaction.
- Add a progression percentage after the location effect is already included. Do not count the same influence twice.
- Every over-improvement is worthless or automatically ineligible. Its supported contribution and program requirements need analysis.
- Conformity describes the identity of residents. The valuation principle concerns improvements and compatible land uses.
- Mixed use always reduces residential value. Consider the actual market effects; mixed use is not an automatic adverse conclusion.
- Any larger future project is highest and best use. Use all four tests and a consistent net comparison, including existing improvements.
Check your understanding
These are original teaching questions, not recalled or predicted PSI questions. Answer first, then explain why the other choices fail.
1. Which pattern describes the principle of progression?
- A loan balance falls through monthly payments
- An assessed value is automatically multiplied by three
- A superior property suffers a downward surrounding influence
- A lower-valued property receives an upward influence from superior same-type properties in the area
Show answer and explanation
Answer: D. A lower-valued property receives an upward influence from superior same-type properties in the area
Identify the relatively lesser property and the upward association. The principle does not set a fixed amount or guarantee future appreciation.
2. Which pattern describes the valuation principle of regression?
- Every physical repair adds its full cost
- A larger neighboring sale guarantees the smaller home’s price
- A relatively superior property receives a downward influence from lesser same-type surroundings
- The subject rises merely because a year passes
Show answer and explanation
Answer: C. A relatively superior property receives a downward influence from lesser same-type surroundings
Regression reverses the direction and the property receiving the influence. It is different from the statistical technique called regression analysis.
3. In the expressly isolated $320,000 versus $280,000 comparison, what is the supplied relative difference?
- $280,000
- $600,000
- $20,000
- $40,000
Show answer and explanation
Answer: D. $40,000
Subtract the consistent comparison amount: $320,000 − $280,000 = $40,000. The case supplies the isolation assumptions; an unexplained raw price gap would not prove this effect.
4. Must the subject be renovated before it can benefit from progression?
- Only if it becomes the largest house
- Yes, and its price must equal the neighbors’
- No; a supported influence can exist in its present condition
- Yes, a permit is always required
Show answer and explanation
Answer: C. No; a supported influence can exist in its present condition
Present contextual influence and a proposed renovation are separate. The principle does not require construction in every case.
5. For the stated modest subject, which comparable-selection principle is sound?
- Use the highest citywide sale without adjustment
- Always select the largest home next door
- Use verified competitive evidence for the same likely participants, with relevant differences analysed
- Reject any sale beyond a fixed universal one-mile radius
Show answer and explanation
Answer: C. Use verified competitive evidence for the same likely participants, with relevant differences analysed
Physical and legal characteristics, competition, relevant differences and data quality matter. The supplied farther sale is appropriate only under its stated support.
6. Acquisition is $480,000 and all stipulated other outlays are $210,000. Gross sale receipts are $700,000 before the separately required $40,000 return. What residual remains before that return?
- $40,000
- $30,000
- $10,000
- $210,000
Show answer and explanation
Answer: C. $10,000
The total outlay is $690,000; subtract it from $700,000 to get $10,000. That is not the same as meeting the required return.
7. How far short is the $10,000 residual of the supplied $40,000 return requirement?
- $50,000
- $10,000
- $690,000
- $30,000
Show answer and explanation
Answer: D. $30,000
The shortfall is $40,000 − $10,000 = $30,000. The requirement is explicitly separate from the outlay allowance to avoid double counting.
8. The supplied setbacks prohibit an addition and no approval changing that result exists. What should the analysis do?
- Respect the actual restriction while separately analysing any supported present benefit
- Ignore all present location evidence
- Copy the neighbor’s larger floor area
- Treat an hoped-for variance as granted
Show answer and explanation
Answer: A. Respect the actual restriction while separately analysing any supported present benefit
Nearby larger lots do not confer the same expansion rights. A present market influence does not erase legal or physical constraints.
9. A small well-maintained house serves its market, with no supplied feasibility evidence for expansion. What follows?
- Every buyer must renovate it
- Small size alone does not prove neglect or under-improvement
- A larger replacement is automatically the best use
- Deferred maintenance is proved
Show answer and explanation
Answer: B. Small size alone does not prove neglect or under-improvement
Condition, market fit and highest-and-best-use analysis are separate from relative size.
10. On the stated consistent basis, value falls from $420,000 to $399,000. What is the time change?
- A 5% decline
- A $29,000 gain
- A 5% gain
- No change because progression is present
Show answer and explanation
Answer: A. A 5% decline
The change is −$21,000; divide by the earlier $420,000 to get −5%. A separate relative contextual benefit does not reverse this time comparison.
11. At the current date, $399,000 is compared with an otherwise equivalent $370,000 amount without the supplied benefit. What is the current relative difference?
- A guaranteed future sale price
- $769,000
- $29,000
- −$21,000
Show answer and explanation
Answer: C. $29,000
The supplied current comparison gives $29,000. It is not the prior-year appreciation calculation.
12. A feature costs $150,000 but has a supplied $60,000 contribution. What is its stated contribution?
- $210,000
- $150,000
- $90,000 as an automatic tax loss
- $60,000
Show answer and explanation
Answer: D. $60,000
Use the supported contribution. Its difference from expenditure does not itself establish a realized loss, tax deduction or whole-property value.
13. Which four tests belong to highest and best use?
- Legal permissibility, physical possibility, financial feasibility and maximum productivity
- Largest lot, shortest note, highest tax and lowest rent
- Highest gross revenue, tallest building, newest plan and highest asking price
- Owner preference, renovation bill, debt and assessed value
Show answer and explanation
Answer: A. Legal permissibility, physical possibility, financial feasibility and maximum productivity
All four need consideration, including the property as improved. The highest proposed gross revenue alone is not a supported conclusion.
14. Under the express redevelopment assumptions, how much higher is the $470,000 net alternative than $440,000 continued use?
- $30,000
- $470,000 plus the removed cottage’s former value
- $440,000
- $910,000
Show answer and explanation
Answer: A. $30,000
Compare the same existing interest on the supplied net basis: $470,000 − $440,000 = $30,000. Do not add a removed improvement back to that residual.
15. Which factor is improper as evidence of progression?
- Protected-class composition of present or prospective occupants
- Property rights and permitted uses
- Verified market competition
- Supported condition and location differences
Show answer and explanation
Answer: A. Protected-class composition of present or prospective occupants
The cited current program guidance excludes protected-class valuation assumptions and references. Use relevant lawful property and market evidence.
16. What does the conformity principle concern in this valuation context?
- Reasonable similarity of improvements and compatible land uses, with actual market support
- Resident identity matching a neighborhood profile
- A rule that every home must have an identical floor plan
- A universal increase for every expensive feature
Show answer and explanation
Answer: A. Reasonable similarity of improvements and compatible land uses, with actual market support
Conformity concerns property relationships and uses, not protected-class sameness or an instruction to ignore market evidence.
17. For the supplied terminology set of $380,000, $400,000, $400,000, $420,000 and $700,000, which amount occurs most often?
- $380,000
- $400,000
- $460,000
- $700,000
Show answer and explanation
Answer: B. $400,000
The supplied mode is $400,000. The mean is $460,000, a different statistic; neither alone appraises the subject or replaces a complete neighborhood analysis.
18. Does the cited Fannie neighborhood topic make every over-improvement automatically worthless or ineligible?
- No, because every over-improvement guarantees approval
- No; analyse its contribution and apply the actual program requirements
- Yes, unless its cost equals the predominant price
- Yes, every atypical feature has zero value
Show answer and explanation
Answer: B. No; analyse its contribution and apply the actual program requirements
The topic calls for analysis of supported contributory value and lender review where relevant. It explicitly does not make over-improvement itself automatic ineligibility.
19. A supported location influence is already reflected in the reconciled comparable indications. What should happen before adding a separate progression premium for the same influence?
- Automatically add 10%
- Check for double counting; do not add the same effect again
- Automatically add the neighbor’s full price
- Ignore every location difference
Show answer and explanation
Answer: B. Check for double counting; do not add the same effect again
A principle is not an extra mandatory adjustment. The evidence and actual treatment of the influence control; counting it twice would overstate the conclusion.
20. Which conclusion follows from supported progression evidence at a stated effective date?
- A universal annual appreciation percentage
- A guaranteed future resale price
- Guaranteed renovation approval
- A dated relative influence whose amount and future persistence need their own evidence
Show answer and explanation
Answer: D. A dated relative influence whose amount and future persistence need their own evidence
A relative association as of the stated date does not guarantee future prices, permissions, financing or a return. Distinguish it from time appreciation and a completed appraisal.
Common questions
What is the principle of progression in real estate?
It describes a lower-valued property receiving an upward influence through association with superior properties of the same type in the same area. The subject remains its own property: rights, utility, condition, size and market participation still matter. Treat the principle as a pattern to analyse rather than a fixed premium or a guarantee that the smaller house becomes equal in value to its neighbors.
Does progression require renovation or an addition?
No. A supported location or surrounding-property influence can exist for the home in its present condition. A proposed addition or redevelopment raises separate permission, cost, timing and feasibility questions. Do not make construction a prerequisite for every progression example, or assume the opportunity to build more has already been approved.
How is progression different from regression?
Identify the property receiving the influence. Progression concerns the relatively lesser property benefiting from superior same-type surroundings. Regression concerns a relatively superior property suffering an influence from lesser same-type surroundings. These are valuation principles, not loan amortization, physical wear or the statistical method called regression analysis. Actual effects still need relevant evidence.
How is progression different from appreciation?
Progression concerns a relative association; market appreciation concerns a supported increase over time on a consistent property and rights basis. The cited IAAO glossary defines appreciation apart from additions and betterments, so a remodeled-versus-unremodeled comparison does not isolate that market time change. A property can retain a positive contextual benefit while its absolute value falls during a market decline.
Is the smallest house automatically the best investment?
No. Relative size is not an investment conclusion. Acquisition price, rights, condition, market fit, costs, financing, timing, risk and any required return still matter. A small home can be well maintained and appropriate for its current market. Progression does not establish that it is under-improved, needs renovation, qualifies for a loan or will sell at a profit.
Can I add a standard progression percentage?
No universal percentage follows from the principle. Use verified relevant market evidence, account for other differences and explain the supported effect as of the effective date. Do not attribute an unadjusted raw price gap entirely to progression. If the same location influence is already reflected in the comparable indications, adding it again would count the same effect twice.
Is the nearest larger house always the best comparable?
No. A nearby superior property can help describe context while serving a different segment from the subject. The cited Fannie Mae comparable guidance emphasises relevant physical and legal characteristics and the same market participants. A farther competing sale can be appropriate when supported, but neither a mile distance nor a property’s higher price makes it automatically suitable. Apply the actual selection and reporting requirements for the assignment.
Does progression make an addition financially worthwhile?
Not by itself. Check what buyers recognise as contribution, all relevant outlays, permissions, timing, risk and the required return. The supplied renovation case leaves $10,000 before a separately stated $40,000 return requirement, a $30,000 shortfall. That teaching result follows the stated complete cost allowance and does not establish a real project’s budget, approval or profitability.
What does highest and best use add to this analysis?
It tests legal permissibility, physical possibility, financial feasibility and maximum productivity, considering the site as vacant and the property as improved. Existing improvements can remain appropriate until removal or renovation is financially supported. Compare the same property interest and consistent net alternatives. Nearby larger buildings or a hoped-for zoning change do not establish this site’s approved use or its highest and best use.
Can the site benefit more than the existing building?
Potentially, but separate the site opportunity from the improvement’s actual contribution and use assumptions. Redevelopment needs a consistent net analysis of removal, development, time, risk and required return. A residual that already accounts for removal does not support adding the former building’s value back. The supplied case compares the same existing interest before acquisition, rather than adding incompatible land and improvement uses.
Is a cost-contribution gap automatically a loss?
No. Spending and contribution answer different questions. In the supplied feature example, $150,000 of cost and $60,000 of contribution leave a $90,000 gap. That does not by itself establish a tax deduction, realized sale loss or the current value of the entire property. Strong surrounding prices do not erase the need for feature-specific market evidence.
Does conformity describe the people who live nearby?
No. In this valuation context, conformity concerns relevant relationships among improvements and compatible land uses. It does not mean protected-class sameness among residents, prospective occupants or owners. The cited current Fannie Mae topics require objective analysis and exclude protected-class valuation assumptions and references. Use specific lawful property and market facts rather than coded resident-identity claims.
Does mixed use automatically reduce residential value?
No. The cited neighborhood topic treats varied land use as a characteristic to analyse in context. Access to employment or other supported benefits can matter, as can supported adverse external influences. Do not treat every mix of residential and nonresidential uses as a defect, or assume a benefit without evidence. Program requirements and the subject’s actual characteristics still apply.
What is a better neighborhood description for an exam answer?
State the relevant verifiable facts: property types, uses, condition, access, services, supported supply and demand, comparable evidence and the actual effect being analysed. Unsupported labels such as good, poor or desirable are not a substitute for analysis in the cited program. Its unacceptable-practices topic also bars crime-rate references; that program restriction should not be recast as a newly universal federal statute. Relevant objective housing-demand evidence is different from using protected-class identity or a coded proxy as the reason for value.
Is predominant price the average or the value every home must have?
No. In the cited Fannie Mae neighborhood topic, predominant price is the most common or most frequently found price, reported in its specified context. It is different from the arithmetic mean. The topic separately excludes isolated high and low extremes from the reported price range. A particular subject can differ for supported reasons; do not force every home to the same amount or treat a small teaching set as a complete market study.
Does an over-improvement make the property worthless or the loan ineligible?
Not automatically. The cited topic describes a larger or costlier improvement than typical, requires attention to its contribution and says that over-improvement does not necessarily make the property ineligible. A feature can contribute value without recovering its full cost and can be an over-improvement even within the neighborhood’s price range. Actual lending and property requirements still need review; this is neither a blanket approval nor a rule to assign zero.
How should a progression effect be reconciled?
Verify the relevant data, rights, effective dates, transaction terms and other differences. Explain the influence and the reliability of applicable indications, without treating an unadjusted price gap as causal proof. Avoid counting the same location effect both in the comparable analysis and as a separate added premium. The cited reconciliation topic allows properly explained weighting; it does not supply a universal percentage or require every assignment to average three approaches. A supported current influence is not a future-sale guarantee.
Which sources and standards should an Illinois student rely on here?
Use the actual source and purpose. IAAO’s glossary and the older California teaching chapter help define stable economic principles; they do not supply current Illinois licensing authority. The identified current Illinois appraisal rule incorporates 2024 USPAP with no later editions, and the Foundation publicly distinguishes that standards edition from a separate 2026 guidance manual. The cited Fannie topics have their own program scope and link to a separate UAD 3.6 supplement not reproduced here. This guide does not claim to have reviewed the full paid standards books or every reporting requirement. The original practice is exam education, not an appraisal, a neighborhood ranking or a validated readiness score.
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Official sources and scope
Reviewed October 27, 2026. The source record identifies fresh current program topics, selected primary glossary and teaching passages, and explicitly reused prior actual primary readings. The older California chapter supplies stable economic-principle teaching, not current Illinois licensing or USPAP authority. No paid standards book, complete UAD supplement or real-property appraisal is represented as completed.
- PSI Illinois Candidate Information Booklet: National Valuation scope
- IAAO Glossary, third edition: substitution and related valuation definitions
- California DRE chapter 15, printed 385: economic principle definitions
- Fannie Mae B4-1.3-03, June 4, 2025: predominant price and over-improvements
- Fannie Mae B4-1.3-08: comparable selection
- Fannie Mae B4-1.3-09: market-supported comparable adjustments
- Fannie Mae B4-1.3-04: site influence and highest and best use
- Fannie Mae B4-1.3-11: reconciliation and explained weighting
- 12 CFR34.42: federal appraisal and market-value definitions
- Fannie Mae B4-1.1-04, June 4, 2025: supported and nondiscriminatory analysis
- 42 U.S.C. 3605: discrimination in residential real estate-related transactions
- 775 ILCS 5/3-102: covered conduct, advertising and discriminatory effects
- 68 Ill. Adm. Code 1455.240: incorporated USPAP edition and qualified exception
- The Appraisal Foundation: current 2024 USPAP and April 2026 technology guidance
This is exam preparation, not advice for a specific transaction. State law and the applicable facts control. Our editorial and corrections process explains how to report an issue.