Property Valuation
The principle of substitution in real estate valuation states that:
AA property is worth more than its neighbors
BA buyer will not pay more for a property than the cost of acquiring an equally desirable substitute✓ Correct
CDepreciation substitutes for appreciation over time
DAn income property's value is always based on income alone
Explanation
The principle of substitution underlies all three appraisal approaches: a prudent buyer will not pay more for a property than the cost of an equally desirable and available substitute property.
Related Nebraska Property Valuation Questions
- An appraisal report prepared for a federally related transaction must be performed by:
- The market value of a property is best defined as:
- Capitalization rate (cap rate) is calculated as:
- External obsolescence (economic obsolescence) in an appraisal is caused by:
- Highest and best use of a property is defined as the use that is:
- A Nebraska appraiser valuing a 640-acre irrigated corn farm would place the highest weight on which approach?
- A capitalization rate (cap rate) in income property analysis represents:
- Accrued depreciation in the cost approach refers to:
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