What does "conformity" refer to in the context of real estate appraisals?

In the context of real estate appraisals, "conformity" refers to the extent to which a property's design and features fit the standard characteristics of the neighborhood. This concept is grounded in the principle of conformity, which suggests that properties achieve their highest value when they are similar to other properties within the same area.

When an appraiser evaluates a property, they look for how well it aligns with the prevailing architectural styles, sizes, and overall aesthetics common in that neighborhood. A home that is consistent with the characteristics of its surroundings is likely to maintain its value more effectively than one that is markedly different. For instance, if a neighborhood predominantly features traditionally styled homes and a property stands out as a modern, contemporary design, that property might not be valued as highly due to a lack of conformity.

This principle highlights the importance of neighborhood dynamics in determining property values and drives home the notion that the market tends to favor properties that are in harmony with their surroundings.