BC Real Estate Trading Services Licensing Exam Practice · Question
Scenario 39: Which factor does NOT directly influence the 'principal of substitution' in property appraisal?
The 'principle of substitution' states that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute, consider
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Question: Scenario 39: Which factor does NOT directly influence the 'principal of substitution' in property appraisal?
Answer options:
- The cost to build a new, similar property.
- The selling prices of comparable available properties. ✅ The sentimental value of the property for the current owner.
- The rental income a property could generate.
Correct answer: The sentimental value of the property for the current owner.
Explanation: The 'principle of substitution' states that a prudent buyer will pay no more for a property than the cost of acquiring an equally desirable substitute, considering cost, potential income, or utility. Sentimental value is subjective and not an objective market factor. The correct answer is "The sentimental value of the property for the current owner.". This capacity-fill scenario 39 reinforces the same competency for the bc-real-estate bank and follows the certified explanation standard.
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Question explanations
- A developer, Grandview Developments Ltd., plans to build a new condominium project in Kelowna. They register a
- Michael, a real estate licensee, is assisting his client Jane in purchasing a commercial property at 123 Main
- A buyer, David, has entered into a Contract of Purchase and Sale for a vacant lot in Tofino. David's lawyer di
- Maria is purchasing a unit in a newly constructed strata building in Squamish. Her real estate licensee, Ken,
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