Which appraisal concept states that a buyer will not pay more for a property than the cost of a comparable substitute?

Unlock all questions

This demo includes only 20 questions. Upgrade to access hundreds of questions, flashcards, exam simulations, and disable ads.

Full question bankExam simulationsFlashcards

From $25.99Unlock all

Prepare for the Real Estate Ownership Exam with multiple choice questions, flashcards, and detailed explanations. Master land use controls and financing to excel on your test.

Multiple Choice

Which appraisal concept states that a buyer will not pay more for a property than the cost of a comparable substitute?

The substitution principle states that a buyer will not pay more for a property than the cost of obtaining a comparable substitute with similar utility and desirability. This idea explains why market value is driven by the prices of nearby or similar properties, since buyers compare options and choose the best value. Other principles describe different dynamics—conformity relates to value aligning with neighborhood standards, progression to value increasing for lower-valued properties near higher-valued ones, and anticipation to value based on expected future benefits like income or amenities. Therefore, the concept in play is substitution.

Which appraisal concept states that a buyer will not pay more for a property than the cost of a comparable substitute?

Prepare for the Real Estate Ownership Exam with multiple choice questions, flashcards, and detailed explanations. Master land use controls and financing to excel on your test.

Which appraisal concept states that a buyer will not pay more for a property than the cost of a comparable substitute?

Get the latest from Passetra