Property Valuation
The principle of substitution states that a buyer will not pay more for a property than:
AThe assessed value
BThe cost of an equally desirable substitute property✓ Correct
CThe amount the seller paid for it
DThe appraised value less depreciation
Explanation
The principle of substitution holds that an informed buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. This underlies all three appraisal approaches.
Related Arkansas Property Valuation Questions
- The principle of contribution states that the value of an improvement is measured by:
- Which of the following would cause an appraiser to use the cost approach as the primary method of valuation?
- Economic life of an improvement differs from physical life in that it is:
- Which appraisal approach is most commonly used for appraising special-purpose properties such as churches or schools?
- The principle of ANTICIPATION in appraisal states that:
- A comparable home sold for $200,000. It has a garage worth $10,000 that the subject property lacks. The adjusted sale price of the comparable is:
- Physical depreciation that cannot be economically repaired is classified as:
- Regression is an appraisal principle that states:
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