In May 2026, seller Anthony Price insists his home is worth $540,000 because of sentimental improvements. Buyers can purchase nearly identical homes nearby for about $510,000 with no unusual delay. Which appraisal principle best explains why market value will likely stay near $510,000?
Correct Answer
D) Substitution by comparable alternatives
The principle of substitution says a buyer generally will not pay more for a property than the cost of acquiring an equally desirable substitute without undue delay. Because similar homes are available near $510,000, that figure will tend to cap market value.
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A well-kept residential block consists mainly of similar brick colonials. One owner converts the front yard into visible outdoor storage for a repair business, and nearby buyer interest weakens. Which principle most directly supports the appraiser's conclusion that value may be harmed?