SAEE - Core Valuation Principles Questions and Answers

Question 1

An appraiser determines that adding a swimming pool to a property, which costs $50,000, will only increase the property's overall market value by $30,000.
Which core valuation principle does this situation best illustrate?

Accepted Answer

Principle of Contribution

Answer

Principle of Substitution

Answer

Principle of Highest and Best Use

Answer

Principle of Conformity

Question 2

The Principle of Substitution is the foundation for which of the three primary valuation approaches?

Accepted Answer

The Sales Comparison Approach

Answer

The Income Approach

Answer

The Cost Approach

Answer

All of the above

Question 3

A parcel of vacant land is located in an area zoned for commercial use. An appraiser is analyzing its potential. Which of the following is NOT one of the four required criteria for determining the 'Highest and Best Use' of the property?

Accepted Answer

Current use

Answer

Legally permissible

Answer

Physically possible

Answer

Financially feasible

Question 4

An investor is purchasing a commercial property and bases the offer price on the present worth of the future income the property is expected to generate. This is a direct application of which valuation principle?

Accepted Answer

Principle of Anticipation

Answer

Principle of Change

Answer

Principle of Regression

Answer

Principle of Supply and Demand

Question 5

A developer purchases an older, small home on a large lot surrounded by modern, high-value commercial buildings. The developer intends to demolish the house and build a multi-story office building that is permitted by zoning. This plan aligns with which valuation principle?

Accepted Answer

Principle of Highest and Best Use

Answer

Principle of Progression

Answer

Principle of Contribution

Answer

Principle of Assemblage

Question 6

The value of an expensive, high-end home tends to be negatively affected if it is located in a neighborhood of smaller, more modest homes. This phenomenon is best described by the:

Accepted Answer

Principle of Regression

Answer

Principle of Substitution

Answer

Principle of Conformity

Answer

Principle of Change

An appraiser determines that adding a swimming pool to a property, which costs $50,000, will only increase the property's overall market value by $30,000.Which core valuation principle does this situation best illustrate?

An appraiser determines that adding a swimming pool to a property, which costs $50,000, will only increase the property's overall market value by $30,000.
Which core valuation principle does this situation best illustrate?