Humber/Ontario Real Estate Course 3 Exam Practice

What effect can a small run down house have on an adjacent new expensive home?

1. It can impact its value tangibly.

2. It has no impact on the value of the expensive home.

3. It serves as an aesthetic improvement.

4. It is merely a perceived risk without real effects.

5. It would increase the value of the expensive home due to diversity.

6. It qualifies as a minor, negligible stigma.

The correct answer is: It can impact its value tangibly.

A small run-down house can impact the value of an adjacent new expensive home tangibly due to several factors. First, properties in close proximity to one another often influence each other's market value; buyers may consider the overall appeal of the neighborhood when assessing a home's worth. A dilapidated house can detract from the visual appeal and desirability of the area, causing potential buyers to perceive higher risk or lower potential for investment return on the expensive home. The presence of a run-down house may signal to prospective buyers that the neighborhood lacks upkeep, which can lead to lower offers or reluctance to purchase in that area. Additionally, lenders might view the overall neighborhood condition as a factor in appraisals, potentially leading to lower valuations for homes close to substandard properties. Thus, the tangible impact on value stems from both market perception and economic considerations in real estate appraisals.