Humber/Ontario Real Estate Course 2 Exam Practice

How does a stigma affect real estate valuation?

1. Is always relevant regardless of perspectives

2. Involves actual risk in all circumstances

3. Depends on the perspectives of both buyers and sellers

4. Only applies to events that happened on the property

5. Strictly impacts commercial properties only

6. Is negligible in real estate valuation

The correct answer is: Depends on the perspectives of both buyers and sellers

A stigma in real estate refers to a negative attribute associated with a property that may impact its value. The correct answer, C, states that the effect of a stigma on real estate valuation depends on the perspectives of both buyers and sellers. This is accurate because the perception of a stigma can vary among different individuals. What may be a significant issue for one buyer might not be a concern for another, affecting how they value the property. In contrast, the other options do not accurately capture the nuanced impact of a stigma on real estate valuation. Option A is incorrect because the relevance of a stigma can differ based on individual perspectives. Option B is incorrect as stigmas do not necessarily involve actual risk in all circumstances but rather perceived risk. Option D is incorrect because a stigma can extend beyond events that happened on the property to include factors like rumors or reputation. Option E is incorrect as stigmas can impact both residential and commercial properties. Option F is incorrect as stigmas can have a significant impact on real estate valuation depending on the circumstances.