NSAR Practice Exam 2026 – Complete Prep Guide for Realtors

Buyers compare similar properties to determine value because of the Principle of Substitution. When two homes are alike in essential features and desirability, a buyer looks for the one that offers the greatest value for the money. If one property is priced higher, the buyer will gravitate toward the substitute that provides the same satisfaction at a lower price, which helps keep prices in line with what buyers are willing to pay for comparable alternatives. Comparative Market Analysis (CMA) is a practical tool real estate professionals use to estimate value by examining recently sold similar properties; it relies on the substitution idea—value is grounded in the cost of the closest substitute. The other concepts describe broader market dynamics or production efficiency and don’t explain the specific behavior of evaluating substitutes in the buying decision.