Property Valuation
In Maine, the principle of substitution in real estate valuation states that:
AProperties in similar locations have the same value
BA buyer will not pay more for a property than the cost of an equally desirable substitute✓ Correct
CMarket value equals assessed value
DAll properties depreciate at the same rate
Explanation
The principle of substitution is the foundation of all appraisal approaches: a rational buyer will not pay more for a property than the cost of acquiring a comparable substitute. This sets an upper limit on value.
Related Maine Property Valuation Questions
- An appraiser in Maine performing a 'retrospective appraisal' for a property that sold 3 years ago will use comparable sales that are:
- Functional obsolescence in a Maine residential property is caused by:
- A Maine property has a replacement cost new of $400,000 and total accrued depreciation of $60,000. The land value is $75,000. What is the value indication using the cost approach?
- The capitalization rate for a Maine investment property can be described as:
- A Maine appraisal uses the income capitalization approach. A property generates $36,000 net operating income annually. Using a 6% cap rate, the indicated value is:
- A Maine appraiser is asked to provide a 'restricted use appraisal report.' This type of report is:
- In Maine, 'economic life' of a building means:
- The principle of 'regression' in real estate valuation states that:
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