Property Valuation
The sales comparison approach to value is based on the principle of:
ASubstitution — a buyer will pay no more than the cost of an equally desirable substitute✓ Correct
BAnticipation — value is based on future benefits
CContribution — value of each component
DBalance — optimal mix of land uses
Explanation
The sales comparison (market data) approach is based on the principle of substitution: a knowledgeable buyer will pay no more for a property than the cost of acquiring a comparable substitute property.
Related Michigan Property Valuation Questions
- A property generates a net operating income (NOI) of $45,000 annually. Using a capitalization rate of 7.5%, what is the estimated value?
- A 'desk review' of a Michigan appraisal involves:
- In Michigan, the 'abstraction method' (allocation method) of land valuation involves:
- In Michigan, 'oversupply' in a real estate market segment will generally cause property values to:
- In Michigan, an appraisal prepared for a federally related transaction must be performed by a:
- In Michigan, which appraisal approach is typically given the most weight for a single-family residential property?
- Michigan's Principal Residence Exemption (PRE) from certain school taxes requires:
- The replacement cost in Michigan's cost approach represents:
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