The appraisal principle of substitution holds that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute. Which of the following best describes this principle?
Correct Answer
A) A buyer will pay no more for a property than the price of an equally desirable substitute
The principle of substitution states that a rational, informed buyer will pay no more for a property than the cost of acquiring an equally desirable and available substitute property. This principle underlies all three approaches to value used in appraisal. The other options describe the principles of contribution (B), progression (C), and anticipation (D).
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Related Topics & Key Terms
Related Topics:
Key Terms:
Related Concepts
A transfer tax is a tax imposed on the transfer of ownership of real estate.
Reconciliation is the final step in the appraisal process where the appraiser analyzes the value indications from all applicable approaches and arrives at a single final opinion of value. It is not a simple average of the three values.
The comparable sales approach estimates a property's value by comparing it to similar properties that have recently sold in the same market area. It is the most widely used and reliable approach for appraising residential properties.
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- → The income approach to appraisal is most commonly used for which type of property?
- → External obsolescence in Oklahoma:
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