Property Valuation
The 'principle of substitution' in real estate appraisal states that a buyer will not pay more for a property than:
AThe assessed value shown on the town grand list
BThe cost to acquire an equally desirable substitute property✓ Correct
CThe original purchase price plus inflation
DThe highest comparable sale in the neighborhood
Explanation
The principle of substitution holds that a rational buyer will not pay more for a property than the cost of acquiring an equally desirable substitute. This principle underlies all three appraisal approaches: sales comparison, cost, and income.
Related Vermont Property Valuation Questions
- An appraiser is estimating the value of a Vermont lake house. The property has a direct sandy beach that adds significant value. How would the appraiser capture this value?
- Vermont's 'income multiplier' analysis for quick investment property evaluation uses:
- Vermont's 'retrospective appraisal' is conducted to establish value as of:
- When appraising Vermont farmland enrolled in the Current Use Program, an appraiser valuing the farm for its market value (not use value) should:
- Vermont's 'going concern value' for special-use properties such as ski resorts includes:
- Vermont's seasonal vacation home market creates which appraisal challenge?
- When an appraiser makes an upward adjustment for a comparable sale that lacks a garage that the subject property has, this reflects:
- The income approach to value is most commonly used to appraise:
Practice More Vermont Real Estate Questions
1,500+ questions covering all exam topics. Start free — no signup required.
Take the Free Vermont Quiz →