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Valuation and Analysis, 14% of the examination

Principle of substitution

The maximum value of a property tends to be set by the cost of acquiring an equally desirable substitute.

Substitution is the foundation of the sales comparison approach and the reason comparables matter at all. Related principles include contribution, which measures what one component adds to the whole, conformity, progression and regression.

Test the distinction

A relevant question from Valuation and Analysis, selected because its facts or explanation use this concept.

Valuation and Analysis ยท 14%Value

Which principle holds that the maximum value of a property tends to be set by the cost of acquiring an equally desirable substitute?

Written to DRE's published topic list. Not a real examination question, since reproducing those is a misdemeanor under B&P Code section 123.

Primary sources

Use these authorities when a course summary, forum answer, or older flashcard conflicts with the current California rule.

Where this is tested

Property Valuation and Financial AnalysisAll three official DRE valuation topics in one practical guide: value principles, the sales comparison, cost and income approaches, and the financial analysis that turns property data into a defensible answer.14%Practice Valuation and Analysis28 questions on this area, every option explained.Practice

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