Property Valuation
The principle of substitution in Michigan appraisal means:
AA property's value is set by future benefits
BNo buyer will pay more for a property than the cost of acquiring an equally desirable substitute✓ Correct
CValues increase as supply decreases
DThe highest and best use determines value
Explanation
The principle of substitution underpins the sales comparison and cost approaches: a rational buyer will not pay more for a property than the cost of acquiring a comparable substitute. This principle sets the upper limit of value.
Related Michigan Property Valuation Questions
- Under Michigan's Proposal A, a property's taxable value increases annually by the lesser of 5% or:
- Highest and best use in Michigan appraisal analysis requires the use to be:
- A Michigan appraiser notes that a subject property's bathroom has outdated fixtures. This type of depreciation is called:
- External factors that support Michigan home values include:
- The sales comparison approach to value is based on the principle of:
- When performing a comparative market analysis (CMA) in Michigan, which adjustment is made to comparable sales?
- When appraising a Michigan lakefront property, the appraiser would give greatest weight to which approach?
- The cost approach to value is most reliable when:
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