Property Valuation
The principle of substitution states that a buyer will pay no more for a property than:
AIts assessed value for tax purposes
BThe cost of building a comparable replacement property✓ Correct
CThe original purchase price paid by the seller
DThe amount the seller owes on the mortgage
Explanation
The principle of substitution underlies all three approaches to value: a buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property. This principle sets the upper limit of value.
Related Idaho Property Valuation Questions
- What is the primary difference between a 'restricted use' appraisal report and a 'complete' appraisal report in Idaho?
- What is 'progression' and 'regression' as used in real estate valuation?
- Gross rent multiplier (GRM) is calculated by dividing the:
- The principle of anticipation states that property value reflects:
- Physical deterioration in an appraisal refers to:
- What does 'arm's length transaction' mean in Idaho real estate appraisal?
- A USPAP-compliant appraisal in Idaho means the appraiser has followed:
- In Idaho, who is authorized to perform appraisals of real estate for federally related transactions?
Practice More Idaho Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Idaho Quiz →