SAEE Core Valuation Principles 2

Question 1

Under the principle of substitution, what is the maximum value a buyer will pay for a property?

Accepted Answer

The cost of acquiring an equally desirable substitute

Answer

Substitution holds that a buyer pays no more than the cost of an equally desirable alternative.

Question 2

The principle of anticipation states that value is based on what?

Accepted Answer

Expected future benefits of ownership

Answer

Anticipation links value to the present worth of future benefits an owner expects to receive.

Question 3

Which principle explains why an oversized luxury home in a modest neighborhood may not recover its full cost?

Accepted Answer

Regression

Answer

Regression holds that a superior property's value is pulled down by surrounding lesser-valued properties.

Question 4

A modest home located among larger, more expensive homes tends to benefit from which principle?

Accepted Answer

Progression

Answer

Progression raises a lesser property's value due to its association with higher-valued neighbors.

Question 5

The principle of contribution measures value by what standard?

Accepted Answer

The amount a component adds to overall property value

Answer

Contribution evaluates an improvement by the value it adds, not its cost.

SAEE Test Practice Test