Property Valuation
The principle of substitution in appraisal holds that:
AA property's value is determined by the income it generates
BA buyer will not pay more for a property than the cost of acquiring an equally desirable substitute✓ Correct
CValue is created when a property has scarcity, utility, demand, and transferability
DA property's value is influenced by surrounding properties
Explanation
The principle of substitution underlies all three appraisal approaches. It states that an informed buyer will pay no more for a property than the cost of acquiring an equally desirable substitute, whether by purchase or construction.
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