ValuationAppraisal_principlesMEDIUM
The principle of substitution states:
Correct Answer
A) A buyer will pay no more than the cost of an equally desirable substitute
The principle of substitution is foundational to all three appraisal approaches. A rational buyer will not pay more for a property than the cost of acquiring a similar property with equal utility.
Answer Options
A
A buyer will pay no more than the cost of an equally desirable substituteB
Location is the most important factorC
Properties always increase in valueD
The 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 utilityrational buyer
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