Property Valuation
The principle of substitution states that a buyer will pay no more for a property than the cost of:
ABuilding an equivalent structure on vacant land
BAn equally desirable alternative property✓ Correct
CThe most expensive comparable sale in the area
DReplacing all improvements at current costs
Explanation
The principle of substitution is foundational to appraisal: a rational buyer will pay no more for a property than the cost of acquiring an equally desirable substitute property. This underpins the sales comparison approach.
Related Kentucky Property Valuation Questions
- An improvement that adds $15,000 in cost but only $8,000 in value to a Kentucky home is an example of:
- In Kentucky, the 'market data approach' is another term for the:
- In the cost approach, what is the formula for estimating value?
- An appraiser in Kentucky assigns more weight to one approach over the others in a report. This is:
- The principle of anticipation in real estate valuation states that:
- A Kentucky appraiser performing a drive-by appraisal (exterior-only inspection) is completing a:
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- Plottage value refers to the increased value created when:
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