Property Valuation
The principle of substitution states that a buyer will pay no more for a property than:
AThe assessed value set by the county
BThe cost to acquire an equally desirable substitute property✓ Correct
CThe seller's original purchase price plus improvements
DThe average price in the neighborhood
Explanation
The principle of substitution holds that a prudent buyer will pay no more for a property than the cost of acquiring a comparable substitute. This is the foundation of the sales comparison approach and cost approach in real estate appraisal.
Related Texas Property Valuation Questions
- When appraising a single-family home, the sales comparison approach requires adjustments when comparable sales differ from the subject property. A positive adjustment means:
- The principle of 'contribution' in real estate appraisal means:
- A Texas appraiser values a large tract of land that will be developed as a residential subdivision. The appropriate method is:
- In Texas, a county appraisal district's use of 'mass appraisal' techniques means they:
- In Texas, the 'income multiplier' approach (such as the GRM) differs from the capitalization approach in that:
- When a property's value is affected by 'assemblage,' this refers to:
- When a Texas appraiser makes a positive adjustment to a comparable sale, it means:
- Texas ad valorem tax protests must be filed with the county Appraisal Review Board (ARB) by:
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