Property Valuation
The principle of 'substitution' in real estate appraisal states that:
AA property's value is enhanced by nearby properties of higher value
BA buyer will pay no more for a property than the cost of an equally desirable substitute✓ Correct
CThe value of a property is the sum of its parts
DLand value should be appraised separately from the improvements
Explanation
The principle of substitution holds that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. This principle underpins all three appraisal approaches.
Related Arkansas Property Valuation Questions
- In an appraisal, an adjustment for a comparable sale that is SUPERIOR to the subject property results in:
- The cost approach to value is most reliable for:
- When analyzing a sale for use as a comparable, the appraiser should first verify that it was an:
- The sales comparison approach estimates value by:
- Which appraisal principle holds that value is created by the expectation of future benefits?
- External (economic) obsolescence differs from other forms of depreciation because it is:
- The sales comparison approach to value is most appropriate for:
- The principle of CONTRIBUTION states that:
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