What is the exam-ready answer?
| Roadmap lesson | 64 of 500 |
|---|---|
| Official syllabus topic | Principles and Elements of Value |
| Official PSI area | Valuation and Market Analysis |
| Published area weight | 8% of the 100-question national portion |
| Exam portion | National salesperson portion |
| Source edition | PSI Georgia Candidate Information Bulletin dated July 1, 2026 |
| Last verified | August 2, 2026 |
The Rule
PSI publishes the weight for the complete content area, not a fixed question count for this lesson. Learn the rule well enough to apply it when PSI changes names, numbers, or parties in a new scenario.
Complete lesson
Read each concept as part of one decision system. The exam often gives one accurate statement and three statements that belong to a nearby concept.
Value ingredients
Utility, scarcity, desirability or demand, and effective purchasing power must exist in a transferable property right. An attractive property without legal utility or capable buyers may not command the expected value.
Substitution and contribution
A buyer will not usually pay more than the cost of an equally desirable substitute. An improvement is worth what it adds to the whole, not necessarily what it cost.
Anticipation and change
Value reflects expected future benefits, while physical, economic, social, and governmental change can alter those expectations.
Conformity and neighborhood effects
Reasonable conformity often supports value. A lower-priced property can gain from superior neighbors through progression, while an over-improved property may experience regression.
Decision rule
Georgia-specific distinction
Worked example
Scenario. An owner spends $80,000 on a pool, but comparable buyers pay only about $25,000 more for otherwise similar homes with pools.
Reason it through. Cost and value differ. The pool's contribution is measured by the market's added payment, not the owner's expenditure.
Answer. The indicated contribution is about $25,000, subject to the quality of the comparable evidence.
Common exam traps
- Equating cost with value
- Calling every neighborhood effect progression
- Ignoring purchasing power
- Confusing substitution with conformity
Original practice questions with detailed explanations
These questions were written for instruction and mapped to the current outline. They are not copied from PSI or any live examination. Choose an answer before opening the explanation.
Question 1Which principle says a buyer will compare equally desirable alternatives?
- A. Substitution
- B. Contribution
- C. Regression
- D. Assemblage
Show answer and explanation →
Answer: A. Substitution
Substitution limits price when comparable alternatives can provide the same utility.
Question 2What determines an improvement's contribution?
- A. Its original cost only
- B. The amount it adds to property value
- C. Its age only
- D. The owner's preference
Show answer and explanation →
Answer: B. The amount it adds to property value
Contribution is the market-recognized increment attributable to the component.
Question 3A modest home gains value from more expensive surrounding homes. What principle applies?
- A. Regression
- B. Progression
- C. Plottage
- D. Escheat
Show answer and explanation →
Answer: B. Progression
Progression describes a lower-valued property benefiting from superior neighboring properties.
Mastery tracking
Mark this lesson mastered only when every statement is true.
- State the direct answer and decision rule without notes.
- Explain every core concept in plain English.
- Solve the worked example after changing one important fact.
- Identify the Georgia distinction before reading answer choices.
- Answer all three questions correctly and reject every distractor.
- Repeat the topic in mixed practice on a later day.
Recommended next lesson
Continue with Highest and Best Use. Continue to roadmap lesson 65 and build on this decision rule.
Return to the Valuation and Market Analysis hub to see every official branch and the complete lesson sequence for this content area.