ValuationAppraisal PrinciplesMEDIUM
Principle of substitution:
Correct Answer
A) Buyer pays no more than cost of equally desirable substitute
A rational buyer will not pay more than the cost of an equally desirable substitute.
Answer Options
A
Buyer pays no more than cost of equally desirable substituteB
Location most importantC
Values always riseD
Highest offer winsWhy This Is the Correct Answer
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Why the Other Options Are Wrong
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Deep Analysis of This Valuation Question
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Background Knowledge for Valuation
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Real World Application in Valuation
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Common Mistakes to Avoid on Valuation Questions
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Related Topics & Key Terms
Related Topics:
appraisal-foundationsmarket-value
Key Terms:
substitutionequal utilityfoundational
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More Valuation Questions
The appraisal principle of substitution states that:
Physical deterioration, functional obsolescence, and external obsolescence are the three types of:
Highest and best use means the use that is:
In the sales comparison approach, adjustments are always made to the:
The sales comparison approach to appraisal is most commonly used for which type of property?
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