Property Valuation
The 'principle of substitution' in Virginia appraisal holds that:
AAdding a pool adds exactly the pool's cost to value
BA buyer will not pay more for a property than the cost of an equivalent substitute✓ Correct
CValue always equals cost
DThe income approach always yields the highest value
Explanation
The principle of substitution is the foundation of all three appraisal approaches: a buyer won't pay more for a property than they would pay for a comparable substitute. It sets the ceiling for value.
Related Virginia Property Valuation Questions
- An appraiser uses the 'income capitalization approach' and determines the capitalization rate by the 'band of investment method.' This method is based on:
- When a Virginia appraiser reconciles the three approaches to value, they are doing which of the following?
- In Virginia, the phrase 'arm's length transaction' in real estate means:
- Which appraisal approach is most commonly used to value a single-family residence in a Virginia suburb?
- A Virginia property's economic life is the period during which:
- In Virginia, an appraiser's certification in the appraisal report includes a statement that they have no:
- A Virginia appraiser must comply with the Uniform Standards of Professional Appraisal Practice (USPAP). Violations of USPAP may result in:
- When reconciling value indications from multiple appraisal approaches, a Virginia appraiser should:
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