Property Valuation
The principle of substitution in appraisal theory states that:
AA property's value is determined by the income it produces
BA buyer will pay no more for a property than the cost of acquiring a comparable substitute✓ Correct
CValue is created by anticipation of future benefits
DThe value of one property is affected by values of surrounding properties
Explanation
The principle of substitution is the foundation of the sales comparison and cost approaches — a rational buyer will not pay more for a property than the cost of acquiring an equally desirable substitute.
Related Nebraska Property Valuation Questions
- The sales comparison approach to property valuation is most appropriate for:
- Nebraska county assessors must visit and inspect all real property at least once every how many years?
- Depreciation in the cost approach to appraisal is divided into three categories. Which of the following is an example of 'physical deterioration'?
- The term 'Desk Review' in Nebraska appraisal practice refers to:
- The income approach to valuation is LEAST appropriate for which type of Nebraska property?
- A Nebraska appraiser determines functional obsolescence in an older home because it has only one bathroom for a 4-bedroom home. This is:
- A Nebraska appraiser notes a comparable sale occurred 8 months ago. Current market conditions have appreciated 3% since then. The appraiser should apply a:
- An appraisal is defined as:
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